28/07/2023·3 mins to read

Countdown to payment practice disclosure: large businesses, take heed

The new Business Payment Practices Act 2023 will impose significant new reporting obligations on large businesses from next year. The public reporting obligations relate to payment practices - in summary, payments on invoices received/paid or issued/paid in a reporting period.

The policy driver behind the Act is to provide businesses (particularly small businesses) with visibility of the payment practices of the larger businesses they are dealing with.


From 26 May 2024, the Act will require all large entities to disclose their payment practices every six months. An entity is large if it (and any subsidiaries) had at least $66 million in assets or $33 million in revenue, and expenditure of at least $10 million (excluding salary, wages, and goods and services supplied by related entities) in each of the last two accounting periods. 

Large entities will need to disclose their payment practices twice per year, with the timing of these disclosures to be determined by the Business Payment Practices Registrar once appointed. However, a large entity will not have to make a disclosure for its first disclosure period unless the total revenue of the entity and its subsidiaries in each of the two preceding accounting periods exceeds $100 million.

The precise reporting periods (and commencement date of each period) are not set out in the Act, and will be prescribed by regulations yet to be made.

What must large entities disclose?

To facilitate easy access to payment practice information, the Act establishes a public register - the Business Payment Practices Register. The Register will store information about payment practices, allowing all businesses (and the general public) to assess reporting entities’ payment practices. The Register will record identifying information about each entity, including:

  • Legal name and trading name;
  • Registered address;
  • New Zealand Business Number;
  • Industry classification;
  • Payment practices information; and
  • Any fines or penalties imposed under the Act.

Payment practices information includes:

  • Information about invoices received or paid (in full or in part) by the entity or a subsidiary of the entity during the disclosure period;
  • Information about invoices issued by the entity or a subsidiary of the entity during the period; and
  • Any other information specified by the regulations about the entity’s payment practices during that period.

It does not include intra-group transactions, salary or wages, tax or rates payments, rent or lease payments, or utility payments. If the entity has subsidiaries, it can choose between disclosing payment practices information for the entity and each subsidiary or for the group as a whole. If it chooses to disclose group payment practices, it must also disclose the entity’s payment practice information separately, if it is independently large.

The Ministry of Business, Innovation, and Employment (MBIE) is still working on the finer details of what the business payment practice regulations should cover. Some of the proposed options include:

  • Average number of days to pay supplier invoices;
  • Percentage of invoices paid in full/within the agreed payment period/unpaid after 61 days;
  • Average late payment time.

Reporting entities may also have to disclose information about invoices paid to them, including:

  • Average number of days for receipt of payment;
  • Percentage of invoices received on time;
  • Standard payment terms offered to suppliers.

Will the Payment Practices Disclosure Regime benefit small businesses?

The Government introduced the Act following recommendations by the Small Business Council that it would help small businesses get paid faster. However, at Select Committee stage, the National Party members opposed the Bill because similar payment practice disclosure regimes in Australia and the United Kingdom had not led to a discernible improvement in payment. 

The United Kingdom introduced business payment practice reporting in 2017, making failure to report a criminal offence. However, recent research by the UK Small Business Commissioner found that overdue invoices was not the biggest payment problem for small businesses. The real problem was accepting long payment terms in order to secure work, leading to payments terms of up to 150 days. In 2022, the UK Government introduced new procurement rules requiring businesses to pay 90% of invoices within 60 days or risk being excluded from public contracts.

Australia launched the Payment Times Reporting (PTR) Scheme in 2021, requiring businesses with over AU$100 million annual turnover to publish information on their small business payment times and practices, with daily penalties of up to $66,600 for non-compliance. The Australian Government is currently reviewing the PTR Scheme’s effectiveness and considering possible adjustments. 

The Business Payment Practices Act aims to enhance transparency in business-to-business payment practices. However, based on international experience, it is unclear whether it will have any effect on large business payment practices.

How can large businesses prepare?

Preparation is crucial. If a large business fails to comply with the Act, the Registrar can issue a compliance notice. Non-compliance can result in a penalty of up to $50,000 for individuals or $500,000 for entities. Businesses which fall under the Act should consider:

  • Reviewing current payment practices to identify areas where disclosure could be an issue; and
  • Monitoring and tracking payment practices, including invoice issuance, payment times and outstanding balances. 

Once MBIE releases the draft Business Payment Practices Regulations, businesses will have more information about exactly what information they will need to disclose, and when. We will keep you posted on developments. In the meantime, if you would like to speak to one of our experts about anything discussed in this article and the implications for your business, please get in touch.


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