Stamping out unfair payment practices
Over the past year, the Small Business, Enterprise and Employment Act 2015 has introduced a raft of measures targeted at increasing transparency including the requirement on all companies to maintain a PSC register, detailing people with significant control, which has been required since April 2016. The latest of these measures is a duty on large businesses to publicly report on their payment practices and the regulations implementing this requirement are expected to come into force in April 2017.
The measures have been designed to benefit small and medium sized businesses to discourage late payment with a view to leading to improved standards after it was found that the overall level of late payment owed to SMEs in June 2015 was £26.8 billion. The regulations will affect companies and LLPs who have exceeded at least two of the following thresholds in the preceding two year period: an annual turnover of at least £36 million; a balance sheet total of at least £18 million; and having at least 250 employees.
Qualifying businesses will be required to publicly report twice yearly through a government portal on their payment practices, which will include providing information on the average time the business takes to pay supplier invoices, the proportion of invoices the business pays beyond agreed terms and the standard contractual payment period. Government guidance on how to comply with the requirements is due to be published early next year.
For advice on your businesses payment terms, general terms and conditions of sale and commercial contracts contact our Business Team.< Back