In response to a government consultation on payment practices, the CBI says businesses should include late payment information in their annual reports. This information would be reported to Companies House and aid company comparisons.
Late payment is an issue that affects businesses of all sectors and sizes, but growing firms seem to suffer the most from this. Nationally, an average SME is owed 38,200 in late payments.
The vast majority of businesses know that good supplier relationships are important for success. But there is still too much bad practice out there that must be challenged – we need to encourage and foster a prompt payment culture as it supports growth and jobs,” says John Cridland, CBI director general.
“We want to see companies publishing simple information online and in their annual reports about their payment practices because it shines a light on this important area and makes good business sense from an investor and supplier perspective.”
Read more about how late payments are affecting SMEs:
- Half of SMEs are paid late by large firms
- We need to combat “entrenched late payment culture”
- “Late payment culture set at board level,” says MP ahead of supply chain bullying debate
The CBIs response to the governments consultation, “Business payment practices: duty to report”, also argues that:
- Companies should report annually on the proportion of invoices they pay late and their average time to pay
- Narrative reporting should clearly explain their standard and maximum payment terms
- The governments own reporting mechanisms should be strengthened, as highlighted recently by the National Audit Office
Reporting payment information will help show that larger companies are keeping their word by giving suppliers greater opportunity to challenge unfair terms, says the business organisation.
But we also need to make sure we steer clear of creating accidental perverse incentives that might encourage companies to extend their payment terms to reduce the proportion of those paid late.