New legislation will require large corporate entities to report on how quickly they pay their suppliers, it has emerged.
The rule, which comes into effect April this year, means that large companies and limited liability partnerships (LLPs) will have to publically report twice a year on their payment practices and performance.
Small Business Minister Margot James said the company’s report will have to include the average time taken to pay supplier invoices, and that failure to report will be a criminal offence.
“The UK is home to a record 5.5 million small businesses and the industrial strategy will help address many of the challenges they face getting finance and scaling up,” she said.
“It’s completely unacceptable that small and medium-sized businesses are owed £26.3bn in late payments, which hampers their ability to grow and has no place in an economy that works for all.
“Large businesses have an important role to play and the guidance published today will help them fulfil their responsibilities and improve payment practices across the board.”
Mike Cherry, national chairman at the Federation of Small Businesses, said the efforts to help tackle late payments could save around 50,000 business deaths a year.
“It’s now crucial that these regulations are introduced and robustly enforced with proper sanctions put in place for any large business that tries to hide its payment practices,” he said.
