The government has been working for a number of years to combat the problem of large businesses abusing their position by making late payments to small businesses. There is a legal requirement (introduced in April 2017) for large businesses to report publicly on their payment practices.
A large business is defined as a company or limited liability partnership that has at least two of the following:
- £36 million in turnover
- £18 million on its balance sheet
- 250 employees
Large businesses within the scope of the rules must prepare and publish information about their payment practices and performance in relation to qualifying contracts. There are normally two reporting periods within the business’ financial year. The report must be submitted within 30 days of the end of the reporting period. 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 the specified filing period of 30 days.
For each reporting period, businesses are required to report on the following in relation to qualifying contracts the statistics on:
- the average number of days taken to make payments in the reporting period, measured from the date of receipt of invoice or other notice to the date the cash is received by the supplier
- 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
- the percentage of payments due within the reporting period which were not paid within the agreed payment period.
You can check a large supplier’s status payment status at www.gov.uk/check-when-businesses-pay-invoices#more-information.