Businesses to report on supplier payment terms

david-menzies By David Menzies, Director of Insolvency

21 June 2017

Every year, thousands of businesses experience severe administrative and financial burdens, simply because they are not paid on time.

Late payment is a key issue for business, especially smaller businesses as it can adversely affect their cash flow and jeopardise their ability to trade. In the worst cases, late payment can lead to insolvency.

Regulations have been introduced which impose a duty on the UK’s largest companies and LLPs to report on a half-yearly basis on their payment practices, policies and performance for financial years beginning on or after 6 April 2017. 

The information must be published through an online service provided by the government, and will be available to the public.

Which businesses must report?

Businesses are required to publish data if, on their last two balance sheet dates (or by reference to the first year only during the second financial period of a new entity), they exceeded two or all of the thresholds for qualifying as a medium-sized company under the Companies Act 2006 (section 465 (3)).

These thresholds are currently:

  • £36 million annual turnover
  • £18 million balance sheet total
  • 250 employees

Special provisions apply in the case of mergers and acquisitions, joint ventures and parent companies/LLPs.

What information requires to be published?

Businesses to which the regulation applies must prepare and publish information about their payment practices and performance in relation to qualifying contracts (see below) for each reporting period in the financial year. The information for each reporting period must reflect the policies and practices which have applied during that period, and the business’ performance for that period.

Normally a business will have two reporting periods in each year. These will be the first six months of their accounting period and the second six months of their accounting period. Special provisions apply where a business extends or shortens its accounting period.

For each reporting period businesses are required to report on the following, in relation to qualifying contracts:

Narrative descriptions of:

  1. the business’ standard payment terms, which must include - the standard contractual length of time for payment of invoices, maximum contractual payment period and any changes to the standard payment terms in the reporting period, and how suppliers have been notified or consulted on these changes
  2. the business’ process for resolving disputes related to payment.

Statistics on:

  1. the average number of days taken to make payments in the reporting period, from the date of receipt of invoice or other notice
  2. the percentage of payments made within the reporting period which were paid in 30 days or fewer, between 31 and 60 days, and in 61 days or longer
  3. the percentage of payments due within the reporting period which were not paid within agreed terms.

Statements (i.e. a tick box) about:

  1. whether suppliers are offered e-invoicing
  2. whether supply chain finance is available to suppliers
  3. whether the business’ 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
  4. whether the business is a member of a payment code, and the name of the code.

The report must be published on a web-based portal at within 30 days of the end of the reporting period and approved by a company director or (for LLPs) a designated member.

Which contracts are qualifying contracts?

A qualifying contract is one which satisfies all the following conditions:

  1. the contract is between two (or more) businesses
  2. the contract has a significant connection with the United Kingdom
  3. the contract is for goods, services or intangible property, including intellectual property
  4. the contract is not for financial services.

Whether a contract has a significant connection with the UK will depend on the specific circumstances. Business will therefore require to put in place procedures to assess whether each contract falls within the scope of being a qualifying contract.

Penalties for non-compliance

It is a criminal offence by the business, and every director of the company or designated member of an LLP, if the business fails to publish a report, containing the necessary information, within 30 days of the relevant financial period end. 

It is also a criminal offence to publish a report or information which is misleading, false or deceptive, where they knew or were reckless about it being false or misleading. Any business or individual found guilty of an offence is liable to a fine which is unlimited in England & Wales and a maximum of £5,000 in relation to Scotland and Northern Ireland.

Further information

The Department for Business Energy and Industrial Strategy has issued Guidance which provides further information to assist large entities with their responsibilities.


  • Business issues
  • Corporate Governance
  • Insolvency
  • Legislation

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