The duty on companies to publish reports on their payment practices and performance, set out in section 3 of the Small Business, Enterprise and Employment Act 2015 (SBEE), comes into force on 6 April 2017. The duty will affect large companies and limited liability partnerships (LLPs), which will have to publish a report on their payment practices on a government website twice a year.
You can read more about the new duties in our article: "Reporting on payment practices and performance".
Margot James, MP and Minister for Small Business, Consumers and Corporate Responsibility, succinctly expressed the aspirations for the new reporting duties in the government's December 2016 response:
"This new reporting requirement for the UK’s largest companies and limited liability partnerships (LLPs) will shine a light on payment practices. It will increase transparency and make payment behaviour a reputational boardroom issue. The large businesses already treating suppliers fairly and paying on time can use the data to highlight their track-record. Poor payment practices and performance will be exposed, alerting organisations to issues and encouraging them to improve."
To assist those large companies and limited liability partnerships that will be subject to the duty, the Department for Business, Energy and Industrial Strategy (BEIS) has published its Guidance to reporting on payment practices and performance (January 2017). The guidance acknowledges that "thousands of businesses experience severe administrative and financial burdens simply because they are not paid on time" and explains which businesses are subject to the duty and how and when to report.
Companies facing the new reporting regime might be interested to read the final research report into The impact of payment reporting requirements, which was published by BEIS on 31 January 2017. The research investigated the cost impact of the reporting requirements on large companies to help better draft the new regulation but the report also gives an insight into the types of procedures that companies will need to budget for.
While smaller construction businesses are welcoming this focus on prompt payment, implementing the regulations might prove uncomfortable for some large construction companies. If nothing else, the risk of criminal proceedings and fines should encourage compliance and, hopefully, an industry-wide change of attitude.