In an article published in Financial Director this week, “The Rules: Pay late? Be publicly shamed”, Gerard Chick, chief knowledge officer at Optimum Procurement, outlined the far-reaching consequences of the new regulation for FDs / CFOs:
“Finance directors will be required to publish a quarterly report on their website and, in the case of groups, on an individual rather than consolidated basis. It will be finance directors who are responsible for ensuring that the reports are prepared and accurate, and if they fail to take all reasonable steps to secure compliance, they will be committing a criminal offence and may be fined.”
The article goes on to highlight the large number of additional practical tasks that will fall under the CFO’s remit and the mounting pressure to establish and prove compliant processes. There are clear benefits to compliance, citing the opportunity to spot “current weaknesses, inefficiencies and risks to which they don’t want exposure”.
The piece also acknowledged that supply chain innovation is the key to enabling the business to pay on shorter terms and maintained that moving from a one-sided relationship to a more collaborative process is an essential starting point. It concluded that CFOs should conduct a health check “in order to avoid their organisations becoming known as bad for business.”
Roberto Moretti, Chief Executive at Oxygen Finance Ltd, added: “This article highlights key reasons why CFOs are starting to place their preparations for the new regulation very high on their agendas. With reputational risks at stake, potentially very substantial fines for non-compliance and the opportunity to gain enhanced visibility, CFOs are recognising that it is critical to act now to ensure they have the necessary steps in place.”
Further details of the forthcoming regulation are contained in our previous news article: “Government to make large companies publish payment practices”.