New late payment rules promised for 2016
The current coalition government said that it if it retains power after the general election, it will bring forward legislation to make large companies publish information on how promptly they pay their suppliers.
This new legislation would be expected to come into force in April 2016. Due to strong support from all political parties, it is thought that this legislation is likely to be introduced whatever shade government take residence in Downing Street in May.
Under the new rules, large companies would be required to disclose their payment terms; average time taken to pay; proportion of invoices paid beyond agreed terms; proportion of invoices paid in 30 days or less, between 31 and 60 days and beyond 60 days, and any late payment interest owed and paid.
Business minister Matthew Hancock said: “We are determined to make Britain a place where late payment is unacceptable and 30-day terms are the norm – with a clear 60-day maximum.
“We’ve acted to ensure all public payments do that, right down the supply chain, and are bringing in new strict transparency rules.
“These new rules will make poor payment performance a boardroom reputational issue for companies and help change the culture once and for all.
The new reporting requirements also mean large companies will have to publically declare whether financial incentives are required to join or remain on supplier lists.
The new payment portal will enable data to be collected on dispute resolution processes, e-invoicing, supply chain finance and preferred supplier lists.
Companies will also report on their membership of codes of practice such as the government-backed Prompt Payment Code, which was recently strengthened to promote 30-day terms as standard, with a 60-day maximum limit. In last week’s budget statement, the government announced that the scope of the code will be extended to consider other poor payment practices.
The Department for Business, Innovation & Skills published its consultation paper ‘Duty to Report on Payment Practices and Policies’ on 26th November 2014 and a consultation process followed.