Do large businesses really call the shots?
Large companies are “killing” New Zealand’s small businesses by making them wait too long for payments.
The need for a policy or terms of trade is crucial when it comes to smaller business working with larger companies. For example, New Zealand’s largest firm, Fonterra, changed its payment terms for contractors and suppliers last year, so now it can take a small business between 60 and 90 days to get paid.
According to a recent report from Dun & Bradstreet, larger companies were the slowest to pay, averaging 8.1 days later than normal. As highlighted in the graph above, late payments and times for New Zealand businesses vary from year to year based on the size of the firm.
The problem of late payments is shared with the Australian economy, with more than 62 percent of small businesses encountering late or unpaid invoices in the past year.
Here are some tips to avoid late payments:
- Make sure you have a clear and signed terms of trade agreement.
- Train your top payers to pay on time (regular calling).
- Offer a variety of payment options.
- Hire an expert or a specialist accounts receivable service to chase slow payers.
- Pay your professional service fees over a fixed term through fee funding.
- Don’t take no or later for an answer.
- Offer flexible payment options.
- Adjust your existing credit terms.
If you need more details about how we can help with business budgeting and managing late payments, contact us on (09) 425 7719 or visit our office at 5 Lilburn Street, Warkworth, to talk to our accountants.