Reporting on payment practices and performance



New rules requiring large companies and large limited liability partnerships to publish information about their payment practices and performance are likely to come into force in April 2017.

Section 3 of the Small Business, Enterprise and Employment Act 2015 gave the Secretary of State power to impose a requirement on companies to publish information about their payment practices and performance. Following a consultation process which started in November 2014, the Department for Business, Energy and Industrial Strategy has published its final response and revised draft regulations.

Businesses covered

The proposed regulations will apply to a company or LLP that, on its last two balance sheet dates, met two or more of the thresholds for a large company or a large LLP in the accounting provisions of the Companies Act 2006. The current thresholds are:

  • Turnover: over £36 million
  • Balance sheet total: over £18 million
  • Employees: over 250

For these purposes, parent companies or LLPs which head large groups will only be required to report if they qualify as large in their own right. Each business in scope will be required to publish its own individual, non-consolidated report.

Contracts covered

The reporting requirement relates to business to business contracts for goods, services and intangible assets (including intellectual property). Financial services contracts are, however, excluded. Contracts must also have a significant connection with the UK.

Frequency of reporting

Businesses will report every six months. The first report will be due 30 days after the end of the first six months of a business’ financial year. The second reporting period will end at the same time as the business’ financial year, with the second report due 30 days later.

Form and location

Businesses will have to publish their report on a web-based service which the government will provide.


Businesses will have to report on the following:

  • Narrative descriptions of:
    • the organisation’s payment terms, including its standard contractual length of time for payment of invoices, maximum contractual payment period and any changes to standard payment terms, and whether suppliers have been notified or consulted on these changes;
    • the organisation’s process for dispute resolution related to payment.
  • Statistics on:
    • the average time taken to pay invoices from the date of receipt of invoice;
    • the percentage of invoices paid within the reporting period which were paid in 30 days or fewer, between 31 and 60 days, and over 60 days;
    • the proportion of invoices due within the reporting period which were not paid within agreed terms.
  • Tick box statements about whether:
    • an organisation offers e-invoicing;
    • an organisation offers supply chain finance;
    • the organisation’s practices and policies cover deducting sums from payments as a charge for remaining on a supplier’s list, and whether they have done this in the reporting period;
    • the organisation is a member of a payment code, and the name of the code.

Approval and sanctions

It will be necessary for a director to approve the information. Failure to publish a report will be a criminal offence, with the company and directors liable to a fine on summary 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. It will also be an offence knowingly or recklessly to publish false or misleading information. Any person who does so will also be liable on summary conviction to a fine.

Duty to report on payment practices and performance: government response and draft regulations.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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