New requirements for large UK companies and limited liability partnerships (LLPs) to publish information about their payment practices and performance are due to be introduced in April 2017.
The draft regulations are due to be brought in under section 3 of the Small Business, Enterprise and Employment Act 2015. They aim to increase transparency and public scrutiny of large businesses’ payment practices and give small business suppliers more information about who to trade with, how to negotiate fairer terms, and challenge late payments.
The new reporting rules will apply to companies and LLPs which meet two or more of the following criteria: turnover of more than £36m; a balance sheet total of more than £18m; and more than 250 employees. They will apply to business-to-business contracts for goods, services and intangible assets. Financial services contracts are excluded.
Every six months, businesses will have to publish information about their payment practices and performance on a government web service. Reports required will cover the organisation’s payment terms; its process for dispute resolution related to payment; statistics on the payment of invoices; whether it offers e-invoicing and supply chain finance; whether its practices and policies cover deducting sums from payments as a charge for remaining on a supplier’s list; and whether it is a member of a payment code.
A director will have to approve the information. Failure to publish a report will be a criminal offence, with the company and directors liable to a fine on conviction. All directors will be liable, unless they can show they took all reasonable steps to ensure the requirement would be met. Equivalent rules will apply to LLPs and their designated members.