Govt considering legislation to make sure small businesses are paid on time
The Government's looking at law changes to ensure small businesses are paid on time.
Small Business Minister Stuart Nash said he is willing to legislate, if necessary, to ensure payments within 20 days, with interest imposed for late payments.
He said prompt payment and cash flow are vital to small business survival, and having to wait as long as 90 days to get paid by big businesses is unacceptable.
"We have heard from businesses that extended payment terms, where businesses are forced to give their business customers an unusually long time to pay, are detrimental to growth and prosperity. Small businesses often don't feel able to ask for more reasonable terms."
Surveys have shown businesses on average were seven days late in paying their bills, with half of small businesses on any given day owed about $7000.
"About half of businesses say late payments hurt their cash flow and increase their stress levels. Nearly a third say late payments inhibit their business growth," Nash said.
He said he wanted to know if legislation was needed and supported, and how it might work.
The Ministry of Business, Innovation and Employment has issued a discussion document with submissions due by mid-April.
Government departments have been told to pay most of their bills within 10 days where possible by the middle of the year.
This article was originally published on RNZ and re-published with permission.
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