The Minister for Small Business says new data from Xero highlights the urgency of prompt payment practices to small and medium enterprises as we move into economic recovery.
Last month Government ministers wrote to significant private enterprises and the banking industry to request they join efforts by government agencies to support SMEs with prompt payment targets.
Today Xero has released analysis of SME cash flow under Alert Level 4. It shows business revenue began to fall once the first COVID19 case was notified in February, prior to the lockdown in late March.
“Xero has reinforced the government’s call for significant private enterprises to help support the economic recovery by paying their bills promptly,” said Stuart Nash.
“The government has a target of 95% of invoices paid in 10 working days. We know many significant private enterprises are working hard to do the same, to support their people and their suppliers.
“We asked most of the top 50 companies on the NZX to step up to support the small business sector with prompt payments. We have had a positive response from several companies in the banking, transport, energy and primary industries.
“For example Fonterra has confirmed it is seeking to accelerate payments to its 10,000 farming businesses and 5,000 small vendors who have business with Fonterra worth up to $300,000. Electronic invoicing will also enable faster payments.
“All businesses across supply chains have a part to play in keeping cash moving and keeping the economy moving. SMEs have been hit hard by the global pandemic. Now more than ever, they need to be treated fairly as we emerge into a recovery phase.
“The new research also highlights the importance to SMEs of the wage subsidy, which has cushioned the blow of the economic shock caused by COVID19.
“The vast majority of businesses who accessed it were small businesses. By late May more than 214,000 self-employed business owners had received the wage subsidy, as well as another 172,000 businesses with under 20 staff.
“Meanwhile more than 69,000 small businesses have applied for interest-free government loans to support cash flow and provide much-needed working capital. Almost $1.2 billion in lending has been sought under the small business loan scheme.
“Cash flow is crucial to kick-starting the economic recovery for our small businesses,” said Mr Nash.