How Many Days Should You Take to Pay Suppliers?
Pay on the due date in your supplier's terms of trade: not earlier unless there's a discount for it, and not later. In NZ that's most often the 20th of the month after the invoice, or 7 to 30 days from the invoice date. Paying right on the due date keeps cash in your business as long as possible without putting the account at risk.
The Standard Advice
NZ has no general law setting how quickly one business must pay another; the deadline is whatever is in the supplier's terms of trade or on the invoice. (Construction payments are the main exception, with their own timeframes under the Construction Contracts Act 2002.) So the right number of days is the one your supplier has given you:
| Term on the invoice | Pay by | Typical in |
|---|---|---|
| 7 days / Net 7 | 7 days after the invoice date | Trades, services, new accounts |
| Net 30 | 30 days after the invoice date | Professional services, some wholesale |
| 20th of the month following | The 20th of the next month | Building supplies, wholesale, manufacturing |
| EOM 30 | 30 days after the end of the invoice month | Larger wholesale accounts |
Lining your payment run up with those dates (a run just before the 20th catches most NZ trade accounts) is the simplest way to pay on time without paying early.
Why Stretching Too Far Backfires
Paying late feels like free cash, but in NZ trade it rarely stays free for long:
- Credit hold. Most trade accounts are put on stop once an invoice is overdue, which means no more orders until you pay, usually at the worst possible moment.
- Interest and fees. Many terms of trade allow interest on overdue amounts and recovery of collection costs. See charging interest on overdue invoices in NZ.
- Credit file. Suppliers can report serious arrears to business credit bureaus, which follows you to your next trade account application.
- Priority. Suppliers remember who pays. When stock is short, reliable payers get served first.
When Paying Early Makes Sense
Only when there's something in it for you. An early payment discount like 2/10 Net 30 works out at roughly 37% a year if you take it, far more than cash earns sitting in a business account. Without a discount, paying weeks early just moves cash out of your business sooner for no return.
How Instalments Change the Calculation
The pressure to stretch usually comes from one or two large invoices, not the everyday ones. A $36,000 stock order due on the 20th can take most of a month's cash in one hit. If that invoice can be split into monthly instalments while the supplier is still paid in full on time, the choice between "pay on time and run short" and "pay late and risk the account" disappears. That's how PaidTerms works for business customers: the supplier is paid upfront and you repay over 3, 6 or 9 months.
Frequently Asked Questions
Is there a legal time limit to pay a supplier in NZ?
Not as a general rule. The payment deadline comes from the supplier's terms of trade or the invoice. Construction contracts are the main exception, with payment timeframes set by the Construction Contracts Act 2002 where the contract doesn't set its own.
Is it OK to pay a supplier a few days late?
Occasionally, if you tell them first. A quick message with a firm payment date protects the relationship far better than silence, and most suppliers will hold off on a credit hold if they know when the money is coming.
Should a small business pay suppliers early?
Only if there's an early payment discount or a clear benefit such as better pricing or priority supply. Otherwise paying on the due date keeps more cash available for wages, tax and unexpected costs.
What does the 20th of the month following mean for when I pay?
Everything invoiced in one calendar month is due on the 20th of the next month. An invoice dated 3 June and one dated 28 June are both due on 20 July.
Can I ask a supplier for longer payment terms?
Yes. A good payment history is your strongest argument, and asking for an extra two weeks on large orders is easier to agree than a blanket change to all your terms.
