The new ‘Duty to Report on Payment Practices and Performance’ legislation comes into force April 2017
Why businesses should treat the new ‘Duty to Report on Payment Practices and Performance’ legislation as more than a tick box exercise. The new duty to report will make a whole host of large companies’ payment-related information publically available for the first time.
Under new Government legislation coming into force in April 2017, large companies will soon be asked to report on their payment practices, policies and performance every six months.
While compliance is mandatory, there are commercial incentives available to those businesses that treat the new Government legislation as more than just a tick-box exercise.
The new duty to report will make a whole host of large companies’ payment-related information publically available for the first time.
With just the click of a button, visitors to a new Government website will be able to access the latest statistics relating to the:
- Average time taken for a business to pay an invoice from the date of receipt
- Percentage of invoices paid in 30 days or fewer
- Proportion of invoices which were not paid within agreed terms
The new legislation is intended to give small business suppliers better information so they can make informed decisions about who to trade with, negotiate fairer terms, and challenge late payments.
As such, simply going through the motions to comply with the reporting requirements could leave large businesses open to long-term reputational damage and leave the small businesses that supply them questioning if they want to do business with them in the future, through fear of
But there are commercial advantages open to the exemplar companies; those that see the value in good payment behaviour and champion a ‘fair payment’ ethos.
Businesses that actively work to improve and maintain their payment performance, through the implementation of eInvoicing software, for example, can use their results as a powerful marketing tool; helping to differentiate themselves from poorly-performing competitors, and also demonstrate that they are committed to supporting their supply chain.
Those that don’t risk their competitors attracting the best suppliers.
This will provide guidelines not just for compliance with the new legislation but how to actively improve payment performance to ensure they are an attractive element within any supply chain.