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Large businesses told to include payment reporting in their annual reports
With the late payment of invoices having such a significant impact on small businesses, the Government is introducing a Fair Payment Code later this year to crackdown on late payments.
By Catherine Heinen, FCCAThe Fair Payment Code will replace the Prompt Payment Code, which is administered by the Office of the Small Business Commissioner, rewards businesses that adopt “fair payment practices for suppliers of all sizes and small suppliers in particular”.
The new code will be more ambitious than its predecessor by setting higher standards, including a Gold Award for businesses paying suppliers within 30 days.
The code is not mandatory but provides benefits to businesses which include being able to use the logo on documentation. Code signatories must:
- Pay suppliers on time
- Give clear guidance to suppliers
- Adopt and encourage good practice
In another step, the Department for Business and Trade (DBT) has also opened a consultation on applying tougher regulations for large businesses. These new regulations will hold large businesses accountable for late payment of invoices and force them to include payment reporting in annual reports. It is hoped the regulations will particularly benefit small businesses and the self-employed.
The new reporting requirements, under the Reporting on Payment Practices and Performance (Amendment) Regulations 2024, were due to be introduced for companies for accounting periods beginning on or after 1 January 2025. However, with the change in Government it is yet to be confirmed whether this change will occur.
Gareth Thomas MP, Minister for Small Business, said: “Small businesses deserve to be paid on time, it’s as simple as that. I’m optimistic that today’s first big step will help pave the way for real change that supports SMEs to thrive and help to grow our economy.”
You can read more about steps your business can take to deal with late payments here.
Date published 30 Sep 2024
Catherine Heinen, FCCA
Catherine is a Technical Content Writer at TaxAssist Accountants, and a qualified accountant. With experience working at two accountancy practices in the UK top 50 accountancy firms according to Accountancy Age, Catherine has significant experience in accounts, tax returns and advising clients. Catherine ensures businesses, business owners and individuals are kept up to date and informed by providing concise and informative technical material.
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