Business Payment Practices Bill

On 26 October 2022, the Government introduced the Business Payment Practices Bill which, if passed, will establish a disclosure regime requiring large businesses to publicly report information on their payment practices. The purpose of the Business Payment Practices Bill is to improve transparency for business-to-business payment practices and provide access to information necessary for small businesses to make well-informed decisions when engaging with large businesses.

The reporting regime will require large businesses with more than $33 million (including GST) in revenue for two or more consecutive accounting periods – to report six-monthly on their payment practices on both a public register and on their own website. Information required to be disclosed will include time taken to pay invoices, the proportion of invoices paid in full and any other information specified by the regulations about an entity’s payment practices. It is anticipated that as a result, large businesses will be incentivised to improve their payment practices to preserve their reputation.

The Ministry of Business, Innovation and Employment (MBIE) will be responsible for establishing the Business Payment Practices Register, where information will be accessible to the public. The Business Payment Practices Bill will not impose penalties for late payments, however, where entities do not comply with the reporting requirements, they may face infringement notices and fines of up to $500,000. MBIE will have authority under the Bill to exempt entities from their reporting requirements, however, only where it is satisfied that such exemption outweighs the interests of the public.

The Business Payment Practices Bill is currently with the Economic Development, Science and Innovation Committee for review with a report expected to be released by 27 April 2023.

If you would like further information on the proposed Bill and what it may mean for your business, please feel free to contact us.