The Department for Business, Energy and Industrial Strategy (BEIS) is to publish guidance to help large businesses report on how quickly they pay their suppliers, ahead of measures coming into force in April 2017 to boost transparency of payment practices to help small and medium sized businesses (SMEs)
The regulations, which are being laid before parliament today, confirm that from April 2017, large companies and limited liability partnerships (LLPs) will have to publicly report twice a year on their payment practices and performance, including the average time taken to pay supplier invoices.
Failure to report will be a criminal offence and BEIS says the guidance will help large businesses and limited liability partnerships prepare for these measures coming into force.
Margot James, small business minister, said: ‘It’s completely unacceptable that small and medium-sized businesses are owed £26.3bn in late payments, which hampers their ability to grow and has no place in an economy that works for all.
‘Large businesses have an important role to play and the guidance published today will help them fulfil their responsibilities and improve payment practices across the board.’
The changes are part of a package designed to shine a spotlight on bad payment practice and lead to improved standards. This includes the appointment of the small business commissioner to support small businesses in resolving payment disputes, with the commissioner’s office expected to be up and running later in the year.
Mike Cherry, national chairman at the Federation of Small Businesses, said: ‘We welcome this as an important tool to change a UK business culture where it is deemed acceptable to pay small firms late.
‘We estimate that if payments were made promptly, 50,000 business deaths could be avoided every year, adding £2.5bn to the UK economy.’
