During April 2017, all large enterprises in the UK will be forced to publish documents on their supplier payment policies and services. The idea behind this is to avoid businesses being let down by late payments.
So, surely you don’t want your businesses names on the public hit list, but what do you need to know to avoid being named and shamed?
What type of companies are covered?
A company with an annual turnover of £36 million+ or a balance sheet exceeding more than £18m or a business with 250 employees+ are all covered by the “late payers regulations.”
What contracts are involved?
Contracts that are suppliers of goods and services are covered, the exceptions are those in financial services and any contracts that do not have a substantial UK connection.
What information will be published
- “Standard payment terms” – this is conveyed in days
- “Arithmetic mean” – the average number of days it takes to be paid
- The fraction of payments made within the first 30 days, between 31 and 60 and 60 days+
- If the company has subtracted money as a charge so the supplier can keep trading with the company
If I don’t comply what happens?
If you refuse to co-operate then it is classed as a criminal offence to the company and directors. It is also a criminal offence to publish anything that is incorrect or misleading.
Those who do not wish to be included will have to publish twice a year within a 30-day gap of the end of the reporting period – these are linked to the business’s financial year (usually the first and second 6 months).
So to avoid having your business’s name hung in shame, you must make sure you comply with the rules and pay on time. We understand that cash flow can cause delays and added pressure but you don’t always have to suffer – if your customers are taking too long pay and you need a quick answer then a solution is invoice finance – a valuable solution.