Move aims to foster a more business-friendly environment, minister says
Minister Andrew Bayly has announced the government’s plans to repeal the Business Payment Practices Act 2023, aiming to alleviate compliance burdens and foster a more business-friendly payment environment.
Recognising the challenges in payment practices
Bayly highlighted the ongoing issues with large entities extending payment terms and delaying invoice payments, stressing the act's inefficiency and the burden it places on businesses.
“There is a major problem with large market players imposing long payment terms and routinely paying invoices late,” he said “However, the Business Payment Practices Act is not an effective solution and would impose unnecessary compliance costs to over 3,000 businesses upgrading their ICT systems.”
Referencing Australia’s similar initiative and its limited impact on improving payment times, Bayly said there were more effective, low-cost alternatives for small businesses to identify late payers.
“Australia implemented a similar scheme in 2020, but a recent review of the scheme’s effectiveness found that payment times have not reduced,” he said. “Furthermore, small businesses can already find out which companies are late payers through a credit agency at minimal cost.”
Commitment and collaboration
The government has committed to shorter payment durations for its own transactions, especially eInvoices, to bolster business cash flow and promote the adoption of eInvoicing among enterprises.
“We will also work with BusinessNZ to create an industry-led voluntary code to ensure small businesses are paid on a more timely basis,” Bayly said. “As a government, we are committed to supporting businesses and getting the economy growing faster.”
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