New Zealand Government Procurement Rules changes - Prompt payments
Rule 36: Prompt payment times
1. Agencies must pay 90% of:
a. domestic trade eInvoices within 5 business days
b. other domestic trade invoices within 10 business days.
2. Agencies must require their suppliers to pay their subcontractors on government contracts on no less favourable payment terms than the ones they receive from agencies.
Application
3. Agencies must report on domestic eInvoice and domestic trade invoice payment times to MBIE quarterly, so these can be made publicly available.
Rule 44: eInvoicing capability
a. receive more than 2,000 domestic trade invoices annually must be capable of receiving eInvoices through their primary accounts payable system(s)
b. send more than 2,000 domestic trade invoices annually must be capable of sending eInvoices through their primary accounts receivable system(s).
2. Agencies must require large suppliers to submit eInvoices.
Definition of "Domestic"
Why this change?
The changes to these rules are minimal (the basic requirements were introduced in November 2024), but reflect the growing understanding of how important cash-flow is for businesses, both small and large.
They also recognise how much work is done for government through smaller sub-contractors – it isn’t enough just to pay the prime contractor promptly. Agencies also have a responsibility to make sure public money flows smoothly through the supply chain and everyone is treated fairly when they are working to support a government outcome.
E-invoicing is becoming a standard approach to invoicing. This doesn’t mean sending invoices by email or pdf, but using international (Peppol) standards, enables finance systems to link directly to each other. This reduces errors brought in through manual handling, speeds up processing times and reduces the risk of fraud. The government is encouraging the use of e-invoicing, and there is plenty of information available here: https://www.einvoicing.govt.nz
What does this mean for me?
By 1st January next year, government agencies must pay 95% of their invoices in the timeframes stated above.
This means that if you are e-invoice capable, you can expect non-disputed invoices being paid within five business days – a far cry from the “20th of the month following” which has been the norm in the past. Even if you aren’t e-invoice ready yet, you should have payment in ten business days.
Even if you don’t contract directly with government, these changes are important
What do I need to do now?
Definition of "Large Supplier"
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