Under new rules introduced by the Small Business, Enterprise and Employment Act 2015 large companies and large LLPs will be under an obligation to report on their payment practices and performance. The new requirement is expected to come into force in April 2017.
These rules form part of the government’s campaign to help to tackle late payment of suppliers by large businesses.
The new reporting requirement will affect those charities and social enterprises established as companies which fulfil the large companies criteria in the Companies Act 2006. “Large” companies are companies which meet two out of the following three criteria:
- turnover of more than £36 million;
- balance sheet total of more than £18 million;
- more than 250 employees.
Under the new rules, every six months a large company will be required to publish a report on its website which discloses, amongst other information:
- Standard payment terms, including any changes made to those terms during the last reporting period.
- Average time taken to pay.
- Proportion of invoices paid after the due date.
- Proportion of invoices paid in 30 days or less, paid between 31 and 60 days, and paid beyond 60 days.
- Amount of late payment interest owed and paid.
This is the latest in a series of Government measures tackling late payment. It follows the introduction in 2015 of the Prompt Payment Code, which is a voluntary scheme requiring signatories to pay suppliers within a maximum of 60 days (in line with the Late Payment of Commercial Debts (Interest) Act 1998), to work towards adopting 30 days as the norm, and to avoid any practices that adversely affect the supply chain.
For more information, please contact our Charity department.
Posted on 16/09/2016 in Legal UpdatesBack to Knowledge