Transparency on payment practices – an update
We reported in January 2015 on proposed regulations to require all quoted companies and other large companies and limited liability partnerships (LLPs) to publish information about their payment practices. The Government has now updated the proposals, which will take effect in April 2016.
The new reporting requirement will not now apply automatically to all quoted companies. Like other companies and LLPs, these will only be caught if they do not qualify as small or medium for the purposes of Companies Act accounting requirements. These thresholds have been amended, as we report here.
The proposed quarterly reporting requirement has been reduced to an obligation to report on a half yearly basis, and the report must be provided in open data format to a single central digital location. An indicative format for the report has been published, which now covers:
- standard payment terms, and any changes to these in the last reporting period (guidance will be provided to clarify what companies should say where they have different standard terms for different kinds of products)
- the average time taken to pay
- the proportion of invoices paid beyond agreed terms
- the proportion of invoices paid in 30 days or less; paid between 31-60 days; and paid beyond 60 days (reporting on the proportion of payments between 61-120 days and beyond 120 days will not be required, as all payments beyond 60 days are considered to represent bad practice)
- the amount of late payment interest owed and paid
- whether financial incentives were required to join or remain on supplier lists
- dispute resolution processes
- the availability of e-invoicing, supply chain finance and preferred supplier lists
- membership of a Payment Code
At present, the Government is not minded to require reporting on other payment practices, such as reverse fixed payments, although this is still under consideration.