HomeInsights & thinkingRequirements for reporting on payment practices for large companies and LLPs
Requirements for reporting on payment practices for large companies and LLPs
06 July 2017
Large companies and large limited liability partnerships (LLPs) are now required to report on their payment practices and policies in relation to certain specified contracts, according to The Reporting on Payment Practices and Performance Regulations 2017 (Regulations).
Those organisations that are caught by the Regulations are required to publish reports relating to their “qualifying contracts”.
Who do the regulations apply to?
They apply to companies and LLPs that meet two or more of these three threshold figures in their last two balance sheets:
annual turnover: £36 million;
balance sheet total: £18 million;
average number of employees: 250 or more.
There are separate thresholds which apply to a parent company of a group. The Regulations will apply to parent companies that meet two or more of these three threshold figures in their last two balance sheets:
aggregate turnover: £36 million net (£43.2 million gross);
aggregate balance sheet total: £18 million net (21.6 million gross);
aggregate number of employees: 250 or more.
Please note that “net” means after any set-offs and other adjustments made to eliminate group transactions and “gross” means without those set-offs and adjustments.
When does it apply?
It applies for financial years beginning on or after 6 April 2017.
What is a qualifying contract?
A “qualifying contract” is any contract which satisfies each of the following conditions:
it is for goods, services or intangible assets (including intellectual property);
the parties have entered into in connection with the carrying-on of a business;
it is not a contract for financial services; and
generally speaking it is governed by the laws of the UK.
What information is to be published?
Businesses which meet the threshold will be required to publish details of their payment policies and practices and more specifically:
Details of standard payment terms (a narrative description of the company’s standard terms of payment), details of any variations to the standard payment terms and the maximum payment period;
an outline of their dispute resolution process for overdue invoices;
a statement as to whether the company’s payment practices and policies in relation to qualifying contracts include an arrangement for supply chain finance and/or provide for the electronic submission and tracking of invoices;
a statement as to whether the company is a signatory to a code of conduct or standards on payment practices; and
details of payment performance, i.e. details of the average number of days to make payments, the percentage of payments made within specified periods, the percentage of payments falling due but not made within payment periods and deductions from payments made.
What is the reporting period?
For most businesses, reporting will occur twice a year. The first reporting period will start on the first day of the company’s financial year, and the second period starts immediately following the previous reporting period.
Legal 500-rated lawyer Sophie Martyn is a associate in our corporate & commercial department with extensive experience of mergers & acquisitions, business start-ups, reconstructions, joint ventures, corporate finance and corporate governance. Clients note that she delivers an “excellent service” and provides “good solid advice”.
Willans’ corporate team has advised one of the UK’s leading recruitment businesses, Sanderson Solutions Group plc, in acquiring recruitment company Highams, along with three further trading divisions of Nakama Group…
The Coronavirus Business Interruption Loan Scheme (CBILS) has thrown a much-needed lifeline to businesses experiencing cashflow difficulties as a result of the coronavirus outbreak. 17 December 2020 Today, Rishi Sunak…
On Christmas Eve, the nation was informed that the UK and EU had struck a Brexit deal. The transition period is now over, and a clearer picture of the future…
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL cookies.
This website uses cookies to improve your experience while you navigate through our website. Out of these cookies, the cookies that are categorised as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyse and understand how you use our website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies but it may affect your browsing experience on our website. You can find our cookie policy here.
Necessary cookies are absolutely essential for our website to function and enable core functionality such as security and accessibility. These cookies do not store any personal information. You can block these cookies by changing your browser settings, but this may affect how the website functions.
We use performance cookies such as Google Analytics to help us count the number of visitors and to see how visitors move around our website when they are using it. This helps us to improve the way our website works, for example, by ensuring that users are finding what they are looking for easily. The cookies collect information in a way that does not directly identify anyone. For more information on how these cookies work, please see our cookie policy.