Large companies will be made to publish their payment practices, as part of a government drive to level the playing field for small business.
Under measures announced on 20 March, from April 2016 large companies would be required to publish their payment practices twice a year, disclosing details including:
- payment terms
- the average time taken to pay
- the proportion of invoices paid beyond agreed terms
- the proportion of invoices paid in 30 days or less, between 31 to 60 days and beyond 60 days
- any late payment interest owed and paid.
Information would be published at a central location such as a publicly accessible online portal, which would also enable data to be collected on issues such as dispute resolution processes, e-invoicing, supply chain finance and preferred supplier lists.
Companies would also be required to report on their membership of codes of practice such as the government-backed Prompt Payment Code, which promotes 30-day terms as standard, with a 60-day maximum limit. In the 18 March Budget, the government announced that the scope of the code would be extended to consider other poor payment practices.
Minister for the Cabinet office Matthew Hancock said: “These new rules will make poor payment performance a boardroom reputational issue for companies and help change the culture once and for all.
“These new reporting requirements also mean large companies will have to publicly declare whether financial incentives are required to join or remain on supplier lists.”
Milsted Langdon can provide expert support to businesses requiring help with a problem debtor or debtors, with a focus on delivering fast, effective solutions. For more information, please contact us.
Link: The Prompt Payment Code