From April, large companies will have to report their payment practices twice a year – including the average time it takes to pay supplier invoices.
A guidance for large businesses to report payment practices, the ‘duty to report’ guidance, was published in early February and it states that from 6 April 2017, large companies and limited liability partnerships (LLPs) will have to publish their payment practices and performance.
The thresholds for this reporting at present are:
The new law will be applicable to any company or LLP which exceeds two of any of these three thresholds. Affected businesses will have to report on their performance twice a year – half way through the financial year and then at the end of it. They’ll be published “on a web-based service provided by or on behalf of government within 30 days of the end of the reporting period”.
The reports should provide a breakdown of payment performance on the percentage of invoices paid between one and 30 days, the percentage paid between 31 and 60 days, and the remaining balance. The average time taken to pay suppliers over the six-month reporting period must also be calculated and published. Any payment disputes must also be recorded.
Failure to report will be a criminal offence and could result in prosecution and fines if a business does not comply, or provide false information.
If you are affected by this change and have any questions please contact me for advice.