Business Minister Matthew Hancock has announced that from April 2016, large companies will be required to publish their payment practices twice a year, in order to ensure that small companies do not get caught out.
Large firms will have to publish the information to a central digital location such as an online portal, which will be made publicly available by the government.
The new payment portal will enable data to be collected on dispute resolution processes, e-invoicing, supply chain finance and preferred supplier lists.
Under the new rules, large companies will be required to disclose:
- payment terms
- average time taken to pay
- proportion of invoices paid beyond agreed terms
- proportion of invoices paid
- in 30 days or less
- between 31 to 60 days
- beyond 60 days
- any late payment interest owed and paid
“We are determined to make Britain a place where late payment is unacceptable and 30-day terms are the norm – with a clear 60-day maximum,” said Business Minister Matthew Hancock.
“Weve acted to ensure all public payments do that, right down the supply chain, and are bringing in new strict transparency rules. These new rules will make poor payment performance a boardroom reputational issue for companies and help change the culture once and for all.”
The new reporting requirements will also mean that large companies will have to publicly declare whether financial incentives are required to join or remain on supplier lists.
Read more about Britain’s late payment culture:
Companies will also report on their membership of codes of practice such as the government-backed Prompt Payment Code, which was recently strengthened to promote 30-day terms as standard, with a 60-day maximum limit.
In the Budget earlier this week, the government announced that the scope of the code will be extended to consider other poor payment practices.
The government intends to lay secondary regulations early in the next Parliament, with the requirement coming into force in April 2016.