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Large businesses need to pay invoices on time or pay a penalty, Minister for Small Business Stuart Nash told a gathering in Warkworth last month.
Mr Nash said he was proposing legislation that would require businesses to pay invoices within 20 days of an invoice being issued.
A discussion document released on the Ministry of Business and Innovation website proposes allowing businesses to charge interest on outstanding invoices.
Mr Nash said this was to prevent small businesses being used by large businesses as banks by drawing out payment.
“Often large businesses use an uneven power balance to push unconscionable payment terms on their small business providers,” he said.
The discussion document suggests small businesses should be able to charge at least 2.8 per cent per annum on outstanding invoices and opportunity costs from reduced cash flow should also be considered.
According to the document, two-thirds of businesses have had an invoice not paid in time in the last 12 months, with payments being 8.6 days late on average.
Accounting platform Xero estimates that small businesses in New Zealand are owed about $7.4 billion in unpaid invoices.
At the meeting in Warkworth, Mr Nash also raised the possibility of raising the GST threshold from $60,000 to $80,000.
Further, he said he would consider raising the provisional tax threshold from $2500 to $5000.
Other topics raised at the meeting in Warkworth included whether businesses would be liable for accidents by employees under the influence of cannabis, if the upcoming referendum resulted in legalisation.
Mr Nash said just as in the case of alcohol, employees would be expected not to arrive at work intoxicated.
“As long as a business had a risk mitigation programme in place, I don’t believe it would be liable,” he said.
One Warkworth chair Chris Murphy asked the minister to advocate for funding to dredge the Mahurangi River in Warkworth, saying it would improve industry in the area by adding a transport link.
Mr Nash said at a cost of $1.5 million a year for the next three years, it was obviously a worthwhile project and he would take it up with the Mayor of Auckland, Phil Goff.
“Council spills more than $1.5 million in coffee each year. It’s not just about downtown Auckland,” he said.
