January 31 2017
The UK government has revealed details of late payment regulations that will come into force from April 2017 with the publication of a guide for affected businesses and regulations laid in Parliament by Small Business Minister Margot James.
Large companies will have to report on their payment practices twice a year, and government's hope is that the resulting scrutiny will encourage them to improve their treatment of SME suppliers by paying their invoices faster than has hitherto been the case.
A number of large companies have seen their reputations tarnished in recent years as details about the length of time they take to pay their suppliers have become public. Diageo (owner of brands such as Guiness and Johnny Walker) Tesco, and Inbev (brewer of Stella Artois and Budweiser) have all seen the time they take to pay their suppliers under the spotlight. In the case of Tesco, the scrutiny was so damaging that it resulted in the company quickly announcing changes to its policies and payments to small suppliers with a turnover with Tesco below £10m being reduced to 14 days, a move that was quickly followed by Waitrose.
The regulations confirm that from April 2017, large companies and limited liability partnerships (LLPs) will have to publically report twice a year on their payment practices and performance, including the average time taken to pay supplier invoices.
Small Business Minister Margot James said:
"Itís completely unacceptable that small and medium-sized businesses are owed £26.3 billion in late payments, which hampers their ability to grow and has no place in an economy that works for all.
Large businesses have an important role to play and the guidance published today will help them fulfil their responsibilities and improve payment practices across the board."
Companies that come under the new regulations are any limited company or limited liability partnership that exceeds two of the following three thresholds:
The new legislation requires affected businesses to report:
Samantha White, CEO of My Credit Controllers said:
" We welcome this development and hope for a trickle-down effect on the whole economy with suppliers to larger businesses being paid quicker, they may in turn be able to pay invoices from their own suppliers to their agreed terms. Large companies are not the only ones that treat their suppliers badly! We help many many companies collect their overdue invoices from customers large and small. "
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