New proposals to tackle late payment
New proposals obliging large and listed companies to publish detailed information about their payment practices and performance have been unveiled on the 27 November 2014 by the Business Minister Matthew Hancock.
The proposed changes will provide robust information making it easier for small businesses to compare the role models with the less reputable. Specifically, the average payment time; the proportion of invoices paid beyond terms; and the proportion of invoices paid within 30 days, over 30 days, over 60 days and over 120 days.
The new reporting requirement has been developed in response to feedback from an earlier consultation, where a clear majority supported increased transparency. The new proposals show how the government intends to use the prompt payment power in the Small Business, Enterprise and Employment Bill which is currently going through Parliament. Reporting on a quarterly basis will be a mandatory requirement for all large and quoted companies.
Business Minister Matthew Hancock said:
Tackling late payment is at the heart of our drive to help small businesses. Coming from a small business background, I know just how critical late payment can be for small firms’ cashflow. We know that small businesses are often reluctant to risk losing business by using the redress measures we’ve put in place, so we want to tackle the underlying culture by increasing transparency on payment practices and performance.
The measures we are consulting on will make it clear to small businesses and consumers alike which large businesses behave properly, and those that think they can ride roughshod over their suppliers.
Chief Executive of the Institute of Credit Management, Philip King, said:
Transparency is a key element in changing culture across many aspects of business, and payment behaviour is no exception. I applaud the measures in the Small Business Bill to drive change by allowing more visibility of how businesses behave in paying their suppliers. Small businesses need to make better informed decisions before entering into commercial relationships and this measure will be invaluable in helping them enter into such relationships with their eyes wide open.
The consultation asked for views on the proposals that will see companies:
* reporting on a quarterly basis
* reporting on standardised metrics on payment performance
* disclosing additional narrative information on payment practices
* publishing the information on their website
* facing fines for breach of the requirement
The consultation follows the announcement last month that a new Prompt Payment Advisory Board has been set up to strengthen the impact of the Prompt Payment Code.
BIS published its consultation paper “Duty to Report on Payment Practices and Policies” on 27 November 2014. The consultation will close on 13 January 2015. Responses should be sent firstname.lastname@example.org, clearly marked as a response to the ‘Duty to Report consultation’.
Read more at www.gov.uk/government/consultations/business-payment-practices-and-policies-duty-to-report