From 06 April 2017, all large companies with a turnover of £36 million or more will be forced to publish twice-yearly payment practice reports.
Experts estimate that the ‘Duty to Report’ legislation, which will force LLPs and companies to detail how quickly they pay suppliers, will indirectly save around 50,000 businesses a year.
The latest guidelines state that businesses must report if they meet two or more of the following thresholds:
- £36 million annual turnover
- £18 million balance sheet total
- 250 employees
Government papers say that these reports will be published on a web-based service, thus giving smaller firms the option to check out the larger business’ payment ‘credentials’ before working with them.
It added that failing to report would be a criminal offence.
Mike Cherry, national chairman at the Federation of Small Businesses, said the efforts to help tackle late payments could save around 50,000 business deaths a year.
“It’s now crucial that these regulations are introduced and robustly enforced with proper sanctions put in place for any large business that tries to hide its payment practices,” he said.
What do companies need to report on?
- Descriptions of the business’s payment terms
- The business’s process for dispute resolution related to payment
- Statistics on the average time taken to pay invoices (from the date of receipt of invoice)
- The percentage of invoices paid within the reporting period
- The proportion of invoices due within the reporting period which were not paid within agreed terms
- If the business offers e-invoicing
- If the business’s offers supply chain finance
- If the business’s practices and policies cover deducting sums from payments as a charge for remaining on a supplier’s list, and whether they have done this in the reporting period
- If the business is a member of a payment code, and the name of the code