Payment practice reporting for large companies

Certain large companies and LLPs are now obligated to build several website disclosures into their reporting timetables, including that of payment practices.

The introduction of protective provisions under S3 of SBEEA, provides a means of reducing the administrative and financial burdens on businesses caused by late payments. The Reporting on Payment Practices and Performance Regulations 2017 and the Limited Liability Partnerships (Reporting on Payment Practices and Performance) Regulations 2017, came into force on 6 April 2017.

The regulations introduce a duty on large companies (whether private, public or quoted) and LLPs incorporated in the UK to publish certain information regarding their payment practices on a publicly accessible government website.

The report will need to include such matters as the organisation's standard payment terms, the average time taken to pay, the proportion of invoices paid beyond agreed terms and the amount of late payment interest owed and paid by the organisation.


Which businesses will need to report?

In January 2017, BEIS published guidance to help both companies and LLP's determine whether or not they fall within the scope of the regulations and how to comply with these.

No company or LLP will be required to report on their first financial year. However, reports will need to be published on a twice-yearly basis within 30 days of the end of each reporting period, if a company or LLP meets the specific criteria listed below. UK Companies and LLPs will fall within the scope of the reporting requirements for the financial year if, on their last two balance sheet dates, they have exceeded two or all of the thresholds for qualifying as a medium sized company under the Companies Act 2006 (section 465 (3)).

To qualify as a large company, current thresholds require companies and LLP's to exceed a £36 million annual turnover, an £18 million balance sheet total and more than 250 employees.

It is worth noting that these thresholds will be periodically updated. Whilst considering whether they fall within the scope for that financial year, the updated thresholds should be applied retrospectively to preceding years for the purpose of the reporting requirement size test.

A company or LLP that has one or more subsidiaries will need to evaluate whether they fall under the reporting requirements using a two-stage test. Firstly, the parent itself will need to consider whether it is classified as a large company or LLP (using the individual company/LLP thresholds listed above). Subsequently, if the parent is classified as a large company, consideration will need to be given as to whether the group it heads is large. The current group thresholds require a £36m net (or £43.2m gross) aggregate turnover, £18m net (or £21.6m gross) aggregate balance sheet total and over 250 aggregate employees to be exceeded on both of its last two balance sheet dates. Interestingly, the parent company will only fall under the reporting obligations if both the parent itself and the group pass the respective size tests.


Failing to publish the report within the specified filing period is considered a criminal offence, by both the business and every director of the company or designated member of an LLP. The message to larger businesses to appear transparent in their operations and encourage prompt payment through public reporting is therefore clear. Thousands of businesses experience financial and administrative difficulties, simply because they are not paid on time. The introduction of payment practice reporting intends to challenge and help combat the significant impact of late payment practices on smaller business, and consequently the overall economy in the UK.

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