Dollar bill blues: Why more small businesses are struggling under the weight of late payment
Sunday, 14 June 2026
It’s often the place for the funny, witty or poignant, but a recent Instagram post from businesswoman Jess Carter bristles with frustration.
The owner of OTB Health Club, a mainly for-women gym in the South Auckland suburb of Takanini, Carter points to a long list of outstanding payments - late or unpaid subs ranging from between $15 - $300 - telling her followers “we’ve got pages of them, and we’re trying to chase them up.”
“My bills still have to be paid - I still have to pay my lease, my utilities, my coaches and my team ….so if you are wondering why business in New Zealand is so hard, and all these small businesses are closing down or going into liquidation, this is also a part of it.”
In the wake of that cry from the heart, the gym owner told the Sunday Star-Times she’d had many fellow gym owners reach out to her, saying they had the same struggle with people not paying, or late paying, as the high cost of living eats into their ability to afford anything that are not the absolute essentials.
“I think to be honest this year’s been the worst so far,” Carter says.
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“We have always had a small outstanding [payments] list… but as of this week, our business has an outstanding payments list of $3000, which is really tough.”
The small community gym owner, who also works in charity, could get debt collectors involved, but she’d have to add more to each debt collected, and she’s not comfortable doing that.
“I see these people every day, I know things about their lives, and I know there's going to be really sharp-eyed business people out there that think I'm an absolute idiot, but I don't want people to miss one payment and then end up having to pay an extra $15 on top, so we removed that, and we took over doing the direct debits ourselves.
“But now we are having to do the chasing up constantly, especially as many people are part-paying now. They just don’t have access to that money.”
Carter would like to reinvest back in her gym, upgrading her equipment for example, and expand her business. But she’s prioritising staying afloat right now and affording her own bills.
The latter point cuts to the heart of why late payments create such havoc for a business: they interrupt cash flow and restrain small business owners from being able to invest and grow their businesses. If businesses can’t grow, they decline - and can decline to the point they become uneconomic.
Local business liquidations are at a 15 year high.
Carter can see what’s happening in the economy in her outstanding payments list, and given she also owns a gym in McKinney, Texas with a US-based business partner, she can also compare and contrast.
She says it’s “like another world” in the US.
“It breaks my heart here in New Zealand to look around and … every single person that you talk to is struggling. I love New Zealand, it is a beautiful place to live, but how do we grow? How do we live here? I'm talking to some of our members that are 19, 20 years old, finishing up with their degrees, and the first thing they’re doing is looking at how to leave because they can’t even buy a house here.”
Construction sector woes
While liquidations are hitting businesses across the board, the building sector remains the largest contributor to business insolvency metrics, with 768 construction firms liquidated in the year to March 2026. High material overheads, high interest rates, and cooling project pipelines are causing a severe softening in the sector.
But even those riding out the tough times quite well are noticing the slow flow of money as people delay paying to the last moment.
Certified builder John Kaiser of Whangarei’s Kaiser Construction has been in business for over 20 years and employs four staff. He says while it’s pretty common for clients not to pay or to wait until the final payment, and then not pay at all in some, more extreme cases, “it has been more pronounced of late”.
“There's a lot more economic pressure and challenges out there for everyone, and clients are now watching every penny. A couple of years ago it might be if you're within a couple of grand, but now they will quibble over $70.”
Though some egregious cases end up in legal action, heaping more stress on the business owner, Kaiser protects himself with payment claims, rather than invoices. According to the Construction Contracts Act, it's illegal not to pay a payment claim.
That doesn’t mean people don’t flout the law, with a recent project leaving the business boss owed $37,000, for which he’s paid $11,000 in legal fees to chase, he tells the Star-Times. More often though, he and most others will be having to spend time chasing and resending payment claims to get their money.
“You have to be willing to act on some of those late sort of payments and not let them get away. You have got to say ‘you’ve got till the 20th of the month, or I will be taking legal action’, and you’ve got to mean it,” he says.
“But I've been self-employed for about 20 years now, so I've learned you've got to have massive cash reserves. Maybe $100 grand sitting in an account for a rainy day, as a buffer basically. You have to be versatile and think outside the square, and do all sorts. You have to expect the unexpected, run for the best, to plan for the worst.”
While bigger players in the construction sector don’t have quite the same issues that smaller players may have in keeping their cash flowing, they too notice money flows have slowed.
Stuart Shutt is managing director of Sentinel Homes and founded the company in 2004. It operates a franchise model in 13 locations around NZ, and hires about 60 staff. He says his company is very careful with the subbies and suppliers it uses, and doesn’t have too much of a problem with late payments.
“But when it is a problem, it's a big problem. Because we deal in such big amounts [of money].”
Often, just like Kaiser, Shutt says clients will quibble and be tardy about paying at the end of a process but he’s also noticing it’s harder for clients to get finance at the beginning. “We've definitely noticed that we'll get to contract signing with some clients, we'll start doing finance and they're gone because the banks won't lend what they would have lent them a few years ago.”
He’s observed subbies and tradies at a further remove grappling with an increase in late payments.
“It is quite a frequent discussion, and it tends to be the smaller guys. Often they are working on a handshake, and have a one page contract, if that. The cash industry out there, the black industry …at Sentinel, we won’t have a bar of it, but it's definitely out there and it often results in a lot of pain because there is no way to deal with anything that hasn't been done properly, and what might have seemed the easy route or the cheapest route is sometimes the more expensive route.”
The stats
Have payment times blown out in New Zealand? According to data from the end of the March quarter - prior to the Strait of Hormuz closing - no. The March quarter report from Xero’s Small Business Insight series said average small businesses were being paid 4.5 days late, down from 5.2 days in the December quarter, and at the lowest level since the series began in January 2017.
The average length of time small businesses waited to be paid, after issuing an invoice, was 23.8 days - the best result since late 2021, “although the exceptional March monthly result (22.4 days) is likely to reflect the end of the financial year rather than a genuine improvement,” the results note.
The annual MYOB Business Monitor, which surveys more than a 1000 small and medium business owners, managers and directors, found 42% of such businesses struggled “sometimes”, “often” and “all the time” with late payments - unchanged from last year.
But sentiment about the future is something different, and can be an inhibiting factor for businesses. Rating how much pressure late payments from customers would likely put on the respondents’ business over the next 12 months, those hiring up to 20 workers reported an uptick in either “extreme” or “quite a lot” of pressure over payments, and there was a decrease in those that would face “no pressure”.
MYOB also measures what kind of threat late payment is to small business cash flow, finding 35% of small-to-medium enterprises (SMEs) cite cash-flow impacts as their number one “operational anxiety”.
“Instead of using incoming revenue to invest in innovation, businesses are stuck covering essential daily outgoings using high-cost credit,” MYOB observed.
Shane Laurence is head of growth at FundTap, an invoice financing firm operating across Australasia. It effectively buys late or unpaid invoices off small and medium businesses, solving “intermittent cash flow timing gaps” for them - as well as saving them the hassle of chasing invoices up - for a price.
His business would likely see an uptick in business if payment times blow out, as SMEs work to paper over the gap in the cashflow by selling their invoices. He said an uptick had been seen, but “the larger impact we're seeing is that a lot of corporate or larger businesses are dictating extended terms of trade to smaller businesses - payment terms of up to 45-60 days.
“So the businesses are still being paid on time, but the businesses have to pay two months of wages, materials and operational costs, before they’re getting paid, so it's more that sort of structural change that's placing that short term cash flow pressure on small businesses.”
Obviously, the payment of small businesses by large companies is in a different category to small businesses struggling because their individual customers are struggling. The former has a special focus in law, for one thing. In 2022, the-then Government introduced the Business Payment Practices Bill, clamping down on companies generating revenue of over $33m from using smaller companies as effectively interest-free credit lines for withholding payment for weeks, or even months (Fonterra was one with famously 90-day terms of trade).
The laws were loosened again to a degree by the Coalition Government in 2024, for reasons of “paperwork” but some rules remained - such as one mandating 135 core government agencies had to pay 95% of domestic trade invoices within 10 business days.
But FundTap’s Laurence says there are still some medium-sized corporates exploiting terms of trade and holding back payables, pressuring small businesses that have already been doing it tough in the last 2-4 years.
“Some of these don’t have the buffers for those short-term timing gaps that they used to… on the other hand, the ones that have survived this tough time are well positioned for future growth, but just need help until their cashflow gets up to speed again.”
The Star-Times decided to leave the last word to someone who several years ago made such a public stink about his invoices not being paid on time by large companies that he is known unofficially by some as the “patron saint of small business invoicing”.
Ten years ago communications specialist David Cormack co-founded a PR firm and was “struck by how much time I had to spend debt collecting”.
“It was pretty common that people wouldn't meet their due date ever, and when you're a startup or a small business, having cash coming in is absolutely critical to your ongoing survival.”
Big businesses often had terms of trade of 60 days, pretty much unsustainable for small business, according to Cormack, but the power imbalance is so great that few small businesses can do much about it.
It is different where the late payer is a small business also having problems, he reckons, “but those larger organisations for whom these payments are not overly difficult to do, have a responsibility to actually pay them on time. I think this is probably the only time that trickle-down economics is actually a thing - when payments are going from small business to small business to small business.”
Being “loud and obnoxious” rather than a retiring wallflower, Cormack bellyached about the disparity to such an extent in the media that companies such as Fonterra and others did agree to shorten their terms of trade. He says he now no longer tolerates late payment at all.
“I've threatened to down tools if a late invoice isn't paid the next day. I've said I'll call debt collectors, and that tends to work because these large organisations, when they are just not paying you, are realistically just using you as an extended line of credit.”
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