December 12 2016
New proposals from government will impose on larger companies a requirement to make public how quickly they are paying their suppliers. Government hopes that this will become a reputational issue for companies and drive better treatment of smaller companies in the supply chain.
Large companies and large limited liability partnerships (LLPs) will be required to publish information about their payment practices and performance twice each financial year on a government web service. They will be forced to report the following:
the average time taken to pay invoices from the date of receipt of invoice
the percentage of invoices paid within the reporting period which were paid in 30 days or fewer, between 31 and 60 days, and over 60 days
the proportion of invoices due within the reporting period which were not paid within agreed terms
In addition they will be required to submit a statement outlining their payment terms and their process for dispute resolution.
Large companies are those which exceeded two or all of following thresholds on both of their last two balance sheet dates: Over £36 million annual turnover. Over £18 million balance sheet total. Over 250 employees
Regulations are expected to come into force in April 2017.
Margot James, Minister for Small Business said:
"Late payment harms business cash-flow, hampers investment and in extreme cases can risk businesses’ solvency. This puts a strain on any organisation, but is especially difficult for small businesses. As of June 2015, the overall level of late payment owed to small and medium sized businesses was reported as £26.8 billion. This is why it is crucial for government to take action to create a more responsible payment culture, which enables all businesses to thrive and develop."
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