Duty to report on payment practices and performance
During 2017 there was a change in legislation where by large companies would be required to produce reports on their payment practices and performances. The reports are required for all companies meeting the criteria, from October 2017 (depending on the date of commencement of the company’s financial year).
The criteria to be classed as a large company is:
- An annual turnover of £36 million
- Greater than a total of £18 million on their balance sheet
- In excess of 250 employees
What does this mean in practice?
If you are a smaller business hoping to work with a business that now falls into this category you will be able to review their track record for payments for invoices. This will enable you to get a better idea of payment terms and practices before you go into business.
What needs to be included in the report?
All companies must include their standard payment terms:
- Contractual length of time for invoice payment
- Changes to standard contractual payment terms in the period
- How suppliers are notified of the changes
- Average days taken to make payments in the reporting period, from the date an invoice is received.
- Percentage of payments made within the reporting periods below:
- 30 days or fewer, between
- 31 and 60 days
- Over 61 days
- The percentage of payments due within the reporting period which were not paid within the agreed payment period
- Detail about weather suppliers are offered e-invoicing
- Detail about weather supply chain finance is available to suppliers
- Whether the business is a member of a payment code of practice
- whether the business and their 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 Government have provided links for the following:
Check if you need to publish a report here: https://publish-payment-practi…
Calculate the reporting periods: https://publish-payment-practi…
Publish a report here: https://publish-payment-practi…
Search for a report here: https://www.gov.uk/check-when-…
The picture so far
Some of the key CICM figures include:
- the average reported time to pay was 38.97 days
- 51.71 per cent the firms paid within 30 days
- 33.02 per cent were paid between 31 and 60 days
- 15.25 per cent were paid later than 60 days
- 27.26 per cent were paid beyond the agreed terms.
If your looking for some advice or help we have a number of toolkits available for you to purchase which can help you with your internal processes.
We also have our Outsource facility if you wanted us to help on a bigger scale.
