Large companies will be required to publish details on how quickly they pay their suppliers, under draft regulations set out by small business minister, Margot James.
Coming into force from April 2017, a “duty to report” will require large companies and limited liability partnerships (LLPs) to publicly report twice yearly on their payment practices and performance, including the average time taken to pay supplier invoices.
A recent survey from the Federation of Small Businesses (FSB) found that, on average, 30% of payments are received late and guidance on how to comply with the “duty to report” will be published early next year, to help large firms prepare for the new requirements.
Mike Cherry, national chairman of the FSB, comments: “Tackling late payments is now a key part of the government’s corporate governance agenda. The comprehensive and regular duty to report is the first step to combat a business culture that feels like one where it is OK to pay small firms late. It is not OK – we estimate that 50,000 business deaths could be avoided every year, if only payments were made promptly – adding £2.5 billion to the UK economy. We need to see executive board level engagement and scrutiny of payment practices to deliver lasting cultural change.”