Firms must report payment performance
Large companies are now required to report on their payment practices and performance as part of the UK government’s industrial strategy.
They will have to publish information twice yearly on how long they take to pay supplier invoices among other things. The reports will be published online to help smaller suppliers decide what companies they want to do business with, the government said.
Companies will have to disclose the number of late payments, the average number of days it took to pay suppliers and the percentage of payments made within 30 days, within 60 days and after more than 60 days.
Margot James, small business minister, said late payments and unfair terms were “a significant threat to small business survival”.
“Our industrial strategy aims to get every part of the UK firing on all cylinders… The common practice of late payment does not fit this vision and it is vital that we recognise that large businesses have a crucial role to play in tackling this issue.”
The rule applies to firms that fell into at least two of the following three categories over the last two years: more than £36m annual turnover, more than £18m balance sheet total and more than 250 employees.
As well as statistics, firms will need to report on their standard payment terms for different types of contract, including the payment period. If firms do not have standard terms, they will have to report on their most frequent contract terms. Changes to standard terms made within the reporting period must also be reported, including how suppliers were consulted and notified before the changes were made.
Business are also expected to describe how they deal with disputes under contracts to help suppliers understand how to proceed if they have concerns.
The report must be approved by a named company director or designated member, and must be submitted onto a centralised government web service. Firms whose financial year began this April will be the first to report, and the earliest deadline will be October this year.
The reporting requirements came into force on 6 April under the Small Business, Enterprise and Employment Act 2015 and the Limited Liability Partnerships Act 2000.