Duty to report on payment practices and performance

For financial years beginning on or after 6 April 2017, large companies and large LLPs have a duty to report on a half-yearly basis on their payment practices, policies and performance in relation to qualifying contracts. The Department for Business, Energy and Industrial Strategy (BEIS) has published guidance to help entities which must comply.

The report must be published on a web-based service provided by or on behalf of government within 30 days of the end of the reporting period. For example a company whose accounting period begins on or after 1 May 2017 would need to report on its first half year by 30 November 2017.

Who does it apply to?

The requirement applies to entities if, on their last two balance sheet dates, they exceeded two or all of the thresholds for qualifying as a medium-sized company: 

  • £36 million annual turnover
  • £18 million balance sheet total
  • 250 employees

In addition:

  • there is no group reporting so every member of the group must report separately;
  • there is no concept of ineligible entities or ineligible groups;
  • there is no requirement to report in an entity’s first financial year; and
  • there is an additional size criterion for parent companies/LLPs.

What is a qualifying contract?

A qualifying contract is a contract which satisfies all of the following:

  • it is between two (or more) businesses;
  • it has a significant connection with the United Kingdom (ie UK Law applies to the contract);
  • it is for goods, services or intangible property, including intellectual property; and
  • it is not for financial services.


It is a criminal offence by the business, and every director of the company or designated member of an LLP, if the business fails to publish a report, containing the necessary information, within the specified filing period (30 days). 

Overview of reporting requirements

The BEIS guidance provides details as to what should be reported and how statistics are derived. However, in essence, for each reporting period entities are required to report on the following and practices, in relation to qualifying contracts. 

Narrative descriptions of: 

  • The standard payment terms which must include:
    • the standard contractual length of time for payment of invoices;
    • maximum contractual payment period and any changes to the standard payment terms in the reporting period; and 
    • how suppliers have been notified or consulted on these changes. 
  • The process for resolving disputes related to payment.

Statistics on:

  • The average number of days taken to make payments in the reporting period, from the date of receipt of invoice or other notice.
  • The percentage of payments made within the reporting period which were paid in 30 days or fewer, between 31 and 60 days, and in 61 days or longer. 
  • The percentage of payments due within the reporting period which were not paid within agreed terms. 

Statements which provide answers to the following:

  • Are suppliers offered e-invoicing? 
  • Is supply chain finance available to suppliers? 
  • Do practices and policies cover deducting sums from payments as a charge for remaining on a supplier’s list, and has this been done in the reporting period?
  • Is the business a member of a payment code and, if so, what is the name of the code? 

Note: Some of the reporting requirements may require entities to update their information systems to extract the necessary information eg the requirement to report on a percentage of the volume of invoices rather than the value.

Read the full guidance from the Department of Business, Energy and Industrial Strategy.

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