BusinessNZ says it could be worthwhile exploring a voluntary code of ethics for invoice payment times, with the Government also expected to comment soon on this hot button issue for small business.

Small Business Minister Stuart Nash said he and Commerce Minister Kris Faafoi would make announcements in the next month or so in response to a discussion document it released earlier this year on unfair commercial practices.

Nash said he had also asked the Small Business Council to report back on the issue of late payments as the council developed strategy for the sector.

READ MORE:Time big business stopped using small enterprises for working capital


"There is also work going on to ensure the public sector leads by example and that government agencies pay their invoices on time.

"By that we mean within 10 business days.

"Ideally, invoices should be paid in the first payment run after the invoice is approved, and not left until the due date.

"We expect the private sector to work on this too," Nash said.

Cashflow is recognised as the biggest killer of small business, which makes up 97 per cent of all New Zealand enterprises.

The Herald reported last month that calls were growing for big business to stop treating small business like banks by paying invoices late.

Among the critics of large companies using small business for working capital was accounting software company Xero, while Small Business Council chairman Tenby Powell said it was time larger corporates and companies were held to account over late payments.

Tenby supported regulation of payment times.

Meanwhile, BusinessNZ said there could be benefit in the idea of a voluntary code of payment ethics. Australia, the UK and the US have such codes.


Australia's supplier payment code was launched by the Business Council of Australia two years ago.

Its signatories commit to the code's broad payment policies and practices.

One of the commitments is to pay small business suppliers within 30 days of receipt of a correct invoice.

The code has 107 signatories with collective revenue of A$580 billion, including retailers Coles and Woolworths, resources companies Rio Tinto and BHP, and food and beverage manufacturers Coca-Cola and Lion.

The Business Council said the relationship between big and small business in Australia was worth half a trillion dollars and underpins the jobs of 11 million of that country's 13 million workers.

But the Small Business Association of Australia said the code wasn't working.

Chief executive and founder Anne Nalder told the Herald said late payments was a problem in Australia with some payment times by big business of up to 180 days.

"This nonsense is creating a serious cashflow (problem) and assisting in destroying a small business."

Nalder said the Australian Commonwealth government had by regulation from July 1 this year reduced payment times to small business from 30 to 20 days.

"Other state governments are gradually implementing the same with Queensland for example doing the same from 1 July 2020.

"The biggest culprit is big business which is not pulling its weight."

Nalder said the Commonwealth government stated that any big business which fails to pay on time will not receive government contracts.

"But what if a big company does not do contracts?"

"Big business has no excuse not to pay on time. I know that some of these businesses outsource their accounting to countries like India and the Philippines which causes delays and also they probably don't pay taxes in Australia for that service."

BusinessNZ said it was not aware of New Zealand businesses outsourcing their accounting overseas.