Home > Updates > What’s the Business Payment Practices Bill all about?
The Business Payment Practices Bill was introduced to Parliament on 26 October 2022. The Bill sets out to create transparency in New Zealand business-to-business payment terms and practices by enforcing twice-yearly reporting requirements on entities with more than $33 million in revenue (including GST) for two or more consecutive years. This includes disclosing details around the payment of supplier invoices, including late payments made, and the standard payment terms that these large organisations often dictate to suppliers.
Why was the Bill introduced?
The concept of the regime is to provide information to smaller businesses who are seeking to do business with larger, more dominant entities; giving some insight into what payment terms they may be subject to. Information such as what percentage of supplier invoices are paid late, or the average number of days it takes to receive payment, will equip suppliers to make better-informed decisions about who they do business with.
While the legislation does not go so far as to regulate payment terms on business-to-business transactions, the Ministry of Business, Innovation and Employment (MBIE) seem to be hoping the “name and shame” approach will result in fairer deals for the smaller guys. To ensure credibility, the disclosed information will need to be certified and there will be infringements for noncompliance.
How do I learn more about the Bill?
With drawn-out payment terms, or late payment from customers, being significant factors in cash flow issues for businesses, MBIE has sought feedback to ensure the information being reported is what is needed by those who will use the information, and has published information on the Business Payment Practices regulations on this MBIE web page.
Subscribe to our Updates to keep informed of any further developments with this Bill or get in touch with your Nexia advisor if you’d like to discuss how it affects your business.