Do you know your duty to report on payment practices & performance?
Under new rules introduced in April 2017, all large UK companies are required to publish specific information regarding their payment policies, practices and performance – including the average time taken to pay supplier invoices – twice yearly
Failure to comply with the rules is a criminal offence and can result in a hefty fine.
The reporting requirement applies to large companies and large limited liability partnership regardless of whether they are private, public or quoted, that meet two or more of the size thresholds in the past two preceding financial years: annual turnover of £36millon; balance sheet total of £18millon; and/or 250 employees.
However, the reporting requirement does not apply to partnerships (provided they are not limited liability partnership (LLP), nor to companies which are incorporated under another country’s laws.
The information for the reporting requirement are prepared on an individual company or individual LLP basis, not at a group level.
No business is required to report in its first financial year.
So why is this being done?
Every year, thousands of businesses experience severe administrative and financial burdens, simply because they are not paid on time. Late payment is a key issue for business, especially smaller businesses as it can adversely affect their cash flow and jeopardise their ability to trade. In the worst cases, late payment can lead to insolvency.
What can I do to make this as easy as possible?
In scope of report, there are some narrative descriptions of reporting practices as well as the following statistics:
- The average number of days taken to make payments in the reporting period, from the date of receipt of invoice.
- The percentage of payments made within the reporting period which were paid in 30 days or fewer, between 31 and 60 days, in 61 days or longer.
- The percentage of payments due within the reporting period which were not paid within agreed terms.
The effective dates are as follows:
Microsoft have made a solution available for Dynamics AX2012R2 and AX2012R3, which calculates and exports statistics on payment practices with the required details to generate reports as follows:
Payments Made – contains statistics of types (1) and (2) above and details per vendor account. In detailed view, it also contains details per payment made within a reporting period.
Payments Due – contains statistics of type (3) above and details per vendor account. In detailed view, it also contains details per invoice due within a reporting period.
HSO Customer Service has put together a simple, cost-effective work package to install the solution, fully test and deliver the report; after this the report will simply be produced by the customer every six months.
Please contact HSO directly for more information.