New Zealand’s banks are committing to paying suppliers of goods and services within two weeks. This initiative matches the government’s target for public sector agencies to pay 95% of invoices from New Zealand-based businesses within 10 working days.
“The economic impact of the Covid-19 pandemic means that many small and medium-sized businesses now need good cash flow more than ever. So it makes sense for banks to step up and make sure they’re paying their suppliers quickly,” says New Zealand Bankers’ Association chief executive Roger Beaumont.
“Last year our banks spent $5.7 billion running their businesses in New Zealand. That includes paying local businesses for goods and services. We expect this initiative will make a difference for many businesses.
“The banking industry understands how important prompt payments are to the viability of many businesses, especially at the moment. We’re pleased to make this commitment to support New Zealand businesses. It’s another way in which we’re supporting our economic recovery.”
Banks will vary in how they meet this commitment. Some already pay within a week of receiving invoices, some will pay within two weeks, and others will pay within 10 days of invoices entering their finance system.
To date banks have approved around $8 billion in new lending to businesses since New Zealand went into alert level 4 lockdown on 26 March.
Other ways in which banks are supporting businesses at this time include:
- Restructuring loans to reduce repayments, for example extending the term of the loan, temporarily moving to interest only repayments, and in some cases deferring all repayments temporarily
- Providing new business loans, including loans under the Business Finance Guarantee Scheme
- Deferring mortgage repayments for up to six months
- Consolidating loans to help make repayments more manageable
- Providing access to short-term funding.
All NZBA member banks are part of this prompt payments initiative.