Large businesses could be fined for failing to report how efficient they are at paying suppliers under UK government proposals to tackle late payments.
Proposed changes up for consultation would make it mandatory for large and listed companies to report every quarter the average time taken to pay invoices and what proportion of invoices are paid beyond terms, within 30 days, over 30, 60 and 120 days.
In addition, companies would also have to publish on their websites details of their supply chain finance and e-invoicing, standard payment terms, changes to standard periods for payment, and invoice dispute resolution mechanisms.
The measures are aimed at giving suppliers information to help them negotiate fair contract terms, challenge unfair terms and better plan when to expect payment. It is also hoped they will increase competitive pressure to improve payment practices and policies in line with peers, and encourage businesses to process payments more efficiently.
The reporting requirement follows the announcement in October that a new Prompt Payment Advisory Board has been set up to strengthen the impact of the Prompt Payment Code. These measures are part of government plans to tackle late payments under amendments to the Small Business, Enterprise and Employment Bill, which is currently going through Parliament.
“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,” said business minister Matthew Hancock.
“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,” he added.
The consultation will close on 13 January 2015.