Small businesses waiting on about $7.4 billion in overdue payments.
By Anuja Nadkarni
Paremoremo small business owner Craig 'Jacks' Jackson estimates he has written off at least $5000 in debts owing to him since he started his artisan ice-block company Dr Feelgood in 2014.
"People have gone out of business, some were just crooks," Jackson said.
He said larger companies took longer to pay because they often had longer payment terms.
New data from accounting software firm Xero shows he's not alone - New Zealand small businesses are collectively owed about $7.4 billion in overdue payments on any given day.
Xero NZ and Pacific Islands managing director Craig Hudson said cashflow was the number one killer of small business.
He said small businesses were caught between a rock and a hard place dealing with big businesses that often had 30- or 60-day payment terms.
"Small businesses can't cut ties with big companies because larger invoices are their bread and butter," Hudson said.
"Weak cash flow doesn't just impact the financial stability of a business, there's the human impact too, with financial stresses affecting employment, families and mental wellbeing."
Xero's Small Business Insights showed more than half the 350,000 businesses on its platform were owed at least $7,000 on any given day. Based on this, Xero estimated all small businesses were owed about $7.4b in unpaid invoices.
On average half the overdue invoices were at least 16 days past their due date and still pending payment, data showed.
Jackson said operating a seasonal FMCG business was hard enough, but waiting for payments added greater strain on the business.
"Small businesses like ours live month-to-month and if they don't pay us on time it can have quite a large impact on us. I'm not Tip Top - if they didn't pay half of their bills Tip Top's not going out of business."
"Like a lot of small businesses, my staff get paid, I don't."
Jackson, a former filmmaker working in advertising, said he was selling the business as he could no longer afford to grow it.
"I don't have the resources to take it to the next level and don't have the business acumen to do that. I know where my strengths lie - and that's brand and product development."
He said he would like to stay with the business as a product developer, but not as someone running the show.
Accommodation and food service businesses were the most affected by late payments, Xero said.
"It's very difficult for small business to deal with large businesses. I don't know if there's anything that can be done about that. It's just the nature of the beast," Jackson said.
Hudson said big businesses needed to step in the shoes of a small business to understand their pressures and rethink their terms.
"Small businesses are a big part of our economy. They are not only producers and employers but consumers too, buying off each other and keeping the wheels of the economy moving.
"Money needs to be coming in the door for it to go out, and unfortunately many small businesses aren't big enough to absorb late payments, instead they just cope and try to recover."