Following a consultation by the Department for Business, Innovation & Skills (BIS), the government is to bring forward legislation to make large companies publish information on their payment performance and practices. This would come into force from April 2016, making prompt payments a major reputational issue and outlawing the late payment culture which has been the blight of British business for so long.
The policy has strong cross-party support and it is thought that the legislation will be driven forward, irrespective of the election result in May.
Under the new rules, large companies will have to disclose their payment terms, the average time they take to pay their suppliers and the proportion of invoices paid beyond agreed terms, with invoice payments reported according to the following time-bands:
Additional reporting requirements include the average time taken to pay, the proportion of invoices paid and any late payment interest owed and paid.
The new reporting requirements also mean large companies will have to declare publically whether financial incentives are required to join or remain on supplier lists. It is also proposed that a new payment portal will be created to enable data to be collected on dispute resolution processes, e-invoicing, supply chain finance and preferred supplier lists.
It will also be mandatory for Companies to report on membership of the government-backed Prompt Payment Code, recently strengthened to promote 30-day terms as standard, with a 60-day maximum limit.