App iPromise to prevent late payment problems for businesses

Engineer Matt Peacock (left) and business partner Paul Veric have created an app, iPromise, to help tackle problems with late and non-payments for Kiwi businesses. Photo / Supplied

An engineer who has lost tens of thousands of dollars over his career due to unpaid invoices has helped create an app to help others avoid the same fate.

An app designed to ensure businesses get paid on time launched last week, about the same time as Xero released research showing small Kiwi firms were losing a combined $456 million yearly due to late payments.

Cofounders Matt Peacock and Paul Veric created their app, iPromise, when Peacock's "brain started ticking over" to come up with a solution for non-payment.

A self-employed engineer of 20 years, he said he has lost tens of thousands of dollars due to clients not paying or going bankrupt.

"I've never got any money back from a bankruptcy situation," he said.

He and Veric, began thinking of a way to make transactions safer for both clients and suppliers.

Their app allows clients to put the money for a job into a secure BNZ trust account, where it is held until the agreed job is completed. Once the client confirms the job has been done satisfactorily, the payment is immediately sent to suppliers, eliminating the admin work involved in chasing late payments.

All the interest raised from the money while it is held in the trust account is then donated to charity.

"Xero did some research in 2019 that showed $7.4 billion in unpaid invoices and overdue payments in New Zealand," Veric said.

The most recent Xero research also showed the average small business in New Zealand gets paid 6.3 days late, and last year almost half of all invoices issued were paid late - with 8 per cent paid more than a month after they were due.

Veric said businesses were spending precious time chasing late payments and spending months in negative cashflow.

"Small businesses are the heart and soul of the New Zealand economy, we think they deserve and more importantly they need to get paid and they need to get paid immediately when the agreed job is done."

The app will have a charge for suppliers but will be free for clients.

Founder of Inline, a design and construction business, Rhys Doesburg said the days of invoicing clients once a month were gone.

"You don't go to a restaurant, have a meal and go 'okay, I'll pay you next week'. I'm not quite sure why, especially for trades, it's 'okay, I'll pay you next month'."

Doesburg felt one of the driving factors behind the issue with late or non-payments was the increasing cost of construction.

"That really is the root of all the issues at the moment," he said.