Supply chain 23 March 2017

How payment practice reporting will give small suppliers tools to strike better deals

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Chasing late payments can be the death knell of many small businesses
Here, commercial partner at Weightmans law firm, Paul Raftery, gives small suppliers the low-down on what new payment practice reporting rules will mean for them.

From 6 April 2017, some of the UK’s largest companies will be required to undergo payment practice reporting publish details of their payment policies twice a year.

Following in the footsteps of gender pay gap reporting, the Reporting on Payment Practices and Performance Regulations 2017 are designed to tackle the issue of late payments by making the performance of large businesses a matter of public record.

Late payments can have a disastrous effect on a firm’s bottom line, especially if they fall into the small business bracket. According to the Federation of Small Businesses (FSB), 50, 000 business deaths? could be avoided if payments were made on time adding 2.5bn to the UK economy.

it’s hoped payment practice reporting, by makingthis information available, will help small firms build valuable, fair commercial relationships with responsible customers.

Businesses that publish an unflattering picture of their payment practices will find themselves exposed. The information will let suppliers challenge the payment policies of their customers to prompt a change, negotiate a better deal, or make the decision to sever the relationship entirely if they judge it to be a commercially viable option.

Payment practice reporting will also provide valuable management information for smaller businesses – allowing them to assess the payment credentials of large customers and establish where they might be exposed to the risk of disruptive late payments.

Businesses obliged to report must, from 6 April 2017, have met two or more of the following conditions in the last two financial years:

  • An annual turnover exceeding 36m
  • A balance sheet total exceeding 18m
  • An average number of employees exceeding 250
The first reports will be publicly available to view through a government portal from October this year.

What information will be available??


 
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