The Reporting on Payment Practices and Performance Regulations 2017 apply to companies which have, in their last two financial years, exceeded two or all three of the thresholds in s465(3) of the Companies Act that determine whether a company can qualify as medium-sized.

Currently these thresholds are £36m annual turnover; £18m balance sheet total; and an average of 250 employees in the financial year.

The rules apply to both companies and limited liability partnerships which have exceeded the relevant size thresholds, in relation to financial years beginning on or after 6 April 2017.

Government estimates suggest there are about 15,000 companies and LLPs that will be required to report, and it says the aim is to encourage greater transparency and drive a culture change toward more prompt payment. Failure to publish a report or publishing false or misleading information is a criminal offence.

Businesses in scope of the legislation are required to publish information covering their payments in relation to contracts for goods, services or intangible assets (including intellectual property); and which are connected to the carrying on of a business. Contracts for financial services are not covered, but financial companies themselves are not excluded when they are contracting for other goods or services.

The information that companies will have to report on includes metrics such as descriptions of their standard payment terms and dispute resolution process and statements about their payment practices and policies, including availability of electronic invoicing and supply chain finance and membership of a payment code of conduct.

Companies also have to publish statistics about their performance for each reporting period, including the proportion of payments due in the reporting period which were not paid within the contractual payment period; the proportion of payments made in the reporting period which were made within certain time frames; and the average (mean) number of days taken to make such payments.

Publication is to a web-based service to be provided by the Department for Business, Energy and Industrial Strategy (BEIS).  The first mandatory reports are due in October 2017.

The transition costs to business are estimated to be £27.3m (including familiarisation, IT costs, information gathering, and changes to processes). The ongoing annual costs to business are estimated to be £15.4m (including maintenance of systems and processes, cost of preparing, collating, approving and submitting reports twice a year).

The Reporting on Payment Practices and Performance Regulations 2017 are here.

BEIS guidance on business payment practices and performance: reporting requirements is here.