Posted: June 6, 2017
A new statutory reporting duty has come into force requiring disclosure of supplier payment practices. The stated aim is to boost transparency of payment practices to help SME businesses. The new reporting requirement applies to large companies and LLPs, regardless of whether they are private or public companies, based on the size thresholds in the Companies Act 2006 and therefore exceed at least two of the following criteria:-
– Annual turnover of £36m;
– Balance sheet total of £18m;
– 250 employees.
These regulations will require you to report the following on a six monthly basis for certain qualifying contracts:-
– Standard payment terms and your process for resolving supplier disputes;
– Statistics on the average number of days taken to make payments in the reporting period;
– The percentage of payments paid with 30 days, between 31 and 60 days and in excess of 61 days;
– Percentages of payments due within the reporting period which were not paid within agreed terms;
– Whether suppliers are offered e-invoicing and if supply chain fiancé is available;
– Any charge for being on your supplier list, and;
– The name of any payment code observed, including the Prompt Payment Code.
The report must be made on a web based service provided by the Government on the www.gov.uk website via a portal and must be approved by a director within 30 days of the period end.
Guidance can be found at:-
Non-compliance with the regulations, through failing to publish a report or publishing false or misleading information, will be a criminal offence with the company and directors liable to a fine.
The regulations apply for accounting years beginning on or after 6 April 2017. If your business will be affected but your year-end has not yet passed, it would be a good idea to ensure that your systems can provide data for the above disclosures.
The data will be useful for SMEs to search when tendering for work with large businesses.
Please do not hesitate to contact us if you have any queries.