What will large and small businesses be required to consider under any duty to report requirements introduced in secondary legislation as part of the Small Business, Enterprise and Employment Act?
What is clear is that late payment has been identified as an issue that needs to be tackled.
In addition to the duty to report requirements, the Prompt Payment Code has been strengthened, with the creation of an Advisory Board and Code Compliance Board to rule on challenges raised against signatories’ payment behaviour that is detrimental to the supply chain.
In May’s Accounting and Business (p 55) the Prompt Payment Code changes and the timing of the changes were highlighted.
Any duty to report requirements are likely to draw on the code. We may see large companies reporting the following twice yearly within their reported numbers, and possibly also to a separate web portal that will be available for public access:
- standard payment terms, including any changes to these in the last reporting period. (Guidance will be provided to clarify the circumstances where companies may have different standard terms for different kinds of products.)
- average time taken to pay
- proportion of invoices paid beyond agreed terms
- 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
- whether financial incentives were required to join or remain on supplier lists
- dispute resolution processes
- the availability of: e-invoicing; supply chain finance; preferred supplier lists
- membership of a payment code.
Smaller organisations that are signatories of the Prompt Payment Code are likely to have to report annually on the following:
- standard payment terms, including any changes to these in the last reporting period
- average time taken to pay
- proportion of invoices paid beyond agreed terms
- proportion of invoices paid in 30 days or less; paid between 31 and 60 days; and paid beyond 60 days.
ACCA and the Chartered Institute of Credit Management are working together to provide a suite of guidance for businesses.