An updated set of draft regulations that specifically requires large companies in the UK to disclose their payment practices has been recently published and the legislative measures are intended to come into force as from April this year.
The new ‘Duty to Report’ will lead to much greater transparency of the payment practices of the country’s large companies and limited liability partnerships (LLPs).
They will be required to publicly report twice yearly on their payment practises and performance, including the average time taken to pay supplier invoices. The reports will provide smaller suppliers better information about which of the large companies have poor payment practices. Government Ministers are hoping that these new reporting requirements will dramatically reduce the late payment which is a major cause of cash flow problems for SMEs in the UK.
Companies will be required to publish information on the following:
•standard payment terms, or the most frequently used payment terms where there is no standard;
•the percentage of invoices paid in less than 30 days, paid between 31 and 60 days, and over 60 days;
•the percentage of invoices which were not paid within the agreed terms;
•the process for resolving payment related disputes;
•sums deducted from invoices to remain on a supplier list;
•availability of e-invoicing and supply chain finance; and
•membership of a payment code e.g. the Prompt Payment Code Philip King, Chief Executive
Philip King, Chief Executive of the CICM, believes that Government has clearly listened and responded to the need to change payment culture: “The small Business Minister ( Margot James MP) is to be applauded for engaging with a and listening to organisations like the CICM and the Federation of Small Businesses in driving real change” he said.