Earlier this year, Australia brought in their Payment Times Reporting Scheme which aims to improve payment times for small businesses. It requires large businesses and government enterprises to report their payment terms and times to increase transparency about their performance.
Many larger organisations have their own payment terms. Payment on the 20th of the month following the date of invoice is fairly standard in New Zealand. If you raise invoices, you can specify your own payment terms. But they may not be followed, and you may have to fit in with your client’s payment terms.
Knowing those payment terms is really important when you’re planning your cash flow. You cannot assume your client will pay when you think they will.
In my experience, the contact person that you are working with doesn’t always know their organisation’s payment terms. They will be happy to pass on your invoice, but it may get stuck in the larger payment process.
I’ve encountered lots of examples of payment policies creating cash issues for small businesses and I’ve learnt a lot about how to manage cashflow within those confines.
If you are dealing with larger organisations in NZ, here are a few things I suggest you bear in mind:
Find useful info to help you understand more about your business, its accounts and finances.