The Right to Scrutinise - New regulations put spotlight on payment practices

Jan 13th 2017

The government’s new “Duty to Report on Payment Practices and Performance” regulations will come into effect in April 2017, obliging all large businesses to report on how they pay their suppliers.

So long as a business meets the criteria, it will need to report twice-yearly on various aspects of their payment processes, such as their standard payment terms, when suppliers were paid, how many of them were not paid on time, and so on.  These details will then be made available to the public via a central government website.

The implementation of these regulations should come as good news to many suppliers who deal with larger businesses, allowing them advance warning if they are about to start working with a client that has a poor record of payment.  The public access to this data means that companies may find themselves ‘named and shamed’ for poor practice, and could struggle to find suppliers willing to work with them if they garner an especially poor reputation.

It’s hoped that this will help to avoid the situation some suppliers found themselves in with Tesco. In January last year the grocery market watchdog found that Tesco had failed to pay back millions of pounds to a supplier for nearly two years in order to boost profits.

Many in the industry will be waiting eagerly for the first report for professional reasons, but there is also the chance that, for those companies that fail to treat their suppliers with respect, the reports will become a stick that those in the press will want to beat them with.