Late payments don’t just slow one business down – they can create a cashflow crunch right through the supply chain.

Imagine finishing a job, delivering the goods or services, sending the invoice – and then watching the due date pass while you are still waiting to be paid. Meanwhile, your own bills don’t pause.

This is the reality for thousands of New Zealand small business owners right now. And what starts as one late payment can quietly become a crisis that ripples far beyond a single business.

When a customer pays an invoice late, the business waiting for that money still has wages to meet, suppliers to pay, tax obligations to fund and stock to purchase. If it doesn’t have sufficient cash reserves or access to working capital, it may have little choice but to delay some of its own payments. The uncertainty may also force it to defer investment decisions, new hires, and other growth strategies.

That is how a single overdue invoice can start disrupting a supply chain.

And critically, this isn’t just a problem for struggling businesses. Even well-run, profitable operations can find themselves in difficulty when customers consistently pay late.

What’s happening with payment times?

The latest Xero NZ Small Business Insights report shows payments to small businesses in NZ were arriving, on average, 4.7 days after their due date in the June 2026 quarter.

That might not sound dramatic in isolation. But across thousands of transactions, those extra days can represent a substantial amount of working capital that businesses have earned but cannot yet use. They need to continue bankrolling their own operations while waiting to be paid for goods or services already delivered.

How much working capital is being stranded?

Research from Xero again indicates late payments cost NZ small businesses, on average, an alarming $16,000–$17,000 per annum. In October 2024, it estimated the total scale of the problem for the small business sector at a staggering $827 million a year.

For businesses operating on tight margins – which describes thousands of New Zealand SMEs – those numbers are not rounding errors. They are a crisis.

Small businesses carry the load

There are a tick over 610,000 businesses currently registered in New Zealand – 97% of which are small businesses that employ fewer than 20 people. Collectively, they employ around a third of our national workforce.

They are our builders, manufacturers, transport operators, wholesalers, professional services firms, retailers and primary producers. Many operate within supply chains where the financial health of one business is closely connected to the payment behaviour of another.

A business waiting on an overdue payment still has completely non-negotiable outgoings:

  • Wages – people who’ve worked and need to be paid on time
  • Rent and utilities – fixed costs that don’t pause for late payers
  • GST returns and provisional tax – Inland Revenue doesn’t offer much flexibility
  • Supplier invoices and inventory – particularly critical for product-based businesses

Costs have also been on the rise in recent times:

  • The minimum wage rose to $23.95 per hour in April 2026, lifting baseline labour costs across the board
  • KiwiSaver obligations continue to add to employer cost bases
  • Persistent cost-of-living and supply chain pressures mean margins are already tighter than many businesses would like.

Is Policy Finally Catching Up?

There’s a growing realisation among policymakers that business payment times matter – because cash flow problems rarely stay contained to one business.

The Labour Party’s recently unveiled small business election policy, ‘A Fair Go’, proposed that large businesses be required to pay invoices of $25,000 or less from small suppliers within 15 days. They would also be required to publicly disclose how quickly they paid their suppliers.

Whether or not that policy is ever enacted, its very existence signals something important: the conversation is changing. Policymakers are beginning to recognise that payment behaviour matters – because cash flow problems rarely stay contained to one business.

What can SMEs do?

The good news is that there are practical steps businesses can take to reduce their exposure to late or failed payments. These include:

  • Conducting credit checks before extending payment terms to new customers
  • Using clear contracts specifying payment dates, late fees and dispute procedures
  • Requesting deposits or progress payments for large projects
  • Invoicing promptly and accurately
  • Establishing a working capital facility as a core part of a cashflow resilience strategy.

Where an otherwise sound business is caught between paying today’s costs and receiving tomorrow’s revenue, the right working capital solution can make all the difference. The key is to put the right support in place early, before a delayed payment turns into a more serious cashflow issue.

ScotPac has decades of experience in helping New Zealand businesses bridge the working capital gap between delivery of goods or services and receipt of payment. If late payments are slowing your business down, we’d be happy to discuss solutions aimed at keeping your cashflow moving.

Shared Responsibility

Large businesses have enormous power in this equation. Choosing to pay small suppliers promptly isn’t just good ethics – it’s good economics. A healthy supply chain benefits everyone in it.

If you’re a business leader with the ability to influence payment culture in your organisation, I’d encourage you to look at your processes. Could you make it easier for small suppliers to get paid on time?

Small changes in large organisations can make an enormous difference to the small businesses that depend on them.