The move is the latest step in government attempts to stop bill payment abuse, which is particularly prevalent in the construction industry.
Department for Business, Innovation & Skills (BIS) has published proposals that would oblige big companies to reveal every three months their average payment time, the proportion of invoices paid beyond terms, and the proportion of invoices paid within 30 days, over 30 days, over 60 days and over 120 days.
The new reporting requirement has been developed in response to feedback from an earlier consultation, where a clear majority supported increased transparency, BIS said. The new proposals show how the government intends to use the prompt payment power in the Small Business, Enterprise & Employment Bill which is currently going through Parliament. Reporting on a quarterly basis will be a mandatory requirement for all large and quoted companies.
Business minister Matthew Hancock said: “Tackling late payment is at the heart of our drive to help small businesses. Coming from a small business background, I know just how critical late payment can be for small firms’ cashflow. We know that small businesses are often reluctant to risk losing business by using the redress measures we’ve put in place, so we want to tackle the underlying culture by increasing transparency on payment practices and performance.
“The measures we are consulting on will make it clear to small businesses and consumers alike which large businesses behave properly, and those that think they can ride roughshod over their suppliers.”
Institute of Credit Management chief executive Philip King said: “Transparency is a key element in changing culture across many aspects of business, and payment behaviour is no exception. I applaud the measures in the Small Business Bill to drive change by allowing more visibility of how businesses behave in paying their suppliers. Small businesses need to make better informed decisions before entering into commercial relationships and this measure will be invaluable in helping them enter into such relationships with their eyes wide open.”
The consultation paper, Duty to Report on Payment Practices and Policies, can be downloaded at https://www.gov.uk/government/consultations/business-payment-practices-and-policies-duty-to-report