Late payments are one of the key reasons businesses fail. At TISCreport we want to give buyers the ability to both show and assess good practice in making payments to suppliers. Find out more about what we're doing below..
What is the Prompt Payment Code?
The Prompt Payment Code is a voluntary code of conduct for businesses in the UK that aims to promote fair payment practices and ensure that suppliers are paid on time. The code is administered by the Chartered Institute of Credit Management (CICM).
What are the Payments Practice and Performance Reporting Regulations?
The UK payment practices and performance reporting regulations 2017 are a set of rules that regulate the payment practices and performance reporting of businesses operating in the United Kingdom. These regulations aim to improve the transparency and fairness of payment practices in the UK, and ensure that businesses are held accountable for their payment practices and performance.
The Payments Practice and Performance Reporting Regulations were brought in under Section 3 of the Small Business, Enterprise and Employment Act 2015 (and, for limited liability partnerships (LLPs), Section 15 of the Limited Liability Partnerships Act 2000) making it a legal obligation for large companies to report on their payment practices with suppliers. The reporting obligation is on a half-yearly basis.
The payment practices government guide outlines the scope being companies that satisfy two out of the following criteria:
- £36 million annual turnover
- £18 million balance sheet total
- 250 employees
The list of companies in scope has not, to date, been published by UK Government. However on TISCreport we have identified all those who can be determined via access to available open data. You can see this data in action for FTSE100 companies on our public demo FTSE 100 Transparency Dashboard.
Are there any legal requirements related to payment practices and performance reporting?
What are the consequences for companies that do not adhere to the Prompt Payment Code or other payment practice regulations?
Companies that do not adhere to the Prompt Payment Code or other payment practice regulations may face consequences such as negative publicity, damage to their reputation, and a loss of trust from their suppliers. In severe cases, non-compliance may also result in legal action.
How can I find out more about the Prompt Payment Code and payment practice regulations?
You can find out more about the Prompt Payment Code and payment practice regulations by visiting the CICM website or contacting them directly. You can also visit the UK government's website for information on payment practice regulations and reporting requirements.
How does the Prompt Payment Code work?
Companies that sign up to the code agree to pay their suppliers within agreed terms and to provide clear information on payment practices. They also commit to resolving disputes quickly and fairly. The CICM monitors compliance with the code and publishes regular reports on the performance of signatories.
What are the key provisions of the UK payment practices and performance regulations?
- Requiring businesses to publish information about their payment practices and performance on a regular basis
- Establishing a duty for businesses to report on their payment practices and performance to the government
- Providing for the creation of a government-run payment practices and performance reporting database, which will allow businesses to compare their practices and performance to their peers
- Requiring businesses to have written contracts with their suppliers that clearly set out their payment terms and conditions
- Providing for the creation of a complaints and appeals process for suppliers who feel they have been unfairly treated by businesses with regard to payment practices and performance
How often do businesses need to report on their payment practices and performance?
Businesses are required to report on their payment practices and performance at least once per year. The first report was due by April 30, 2018.
What information do businesses need to include in their payment practices and performance reports?
Businesses are required to report on a range of payment practices and performance indicators, including:
The average number of days taken to pay invoices
The percentage of invoices paid within 30 days
The percentage of invoices paid within 60 days
The percentage of invoices paid within 120 days
The percentage of invoices disputed
The percentage of invoices paid late
Any changes to payment terms and conditions
Any instances of supply chain financing or factoring
Any instances of the business requiring suppliers to bear the cost of goods or services before payment is made
What happens if a business fails to report on their payment practices and performance?
If a business fails to report on their payment practices and performance as required, they may be subject to fines and penalties. In addition, the government may choose to publish the fact that a business has failed to report, which could damage the business's reputation.