Amendments to the Payment Practices and Performance Regulations 2017

The UK government, or specifically the Department for Business, Energy & Industrial Strategy (BEIS), has launched a new consultation concerning potential modifications to the Reporting on Payment Practices and Performance Regulations 2017 (SI 2017/395) which stipulate reporting requirements for all companies meeting certain thresholds as regards their payment policies, practices, and performance – or simply their payment culture. Specifically, the BEIS seeks views on ways how it can improve this payment culture among firms in the future and therefore proposes some changes to the current regulation which are briefly noted below. Above all, however, the Department seeks to extend the application deadline of the regulations beyond April 6, 2024, the current expiration date. The sunset date was originally set as the reporting requirement imposed additional obligations upon UK companies beyond those imposed on firms of other EU member states.
Some of the key proposals include the following:
- The BEIS proposes the Introduction of a new value metrics: The current reporting obligation requires firms to report on the proportion of payments made within 30 days, 31 to 60 days, or beyond (volume-based assessment). However, firms are NOT required to report the value of such payments which could lead to a distortion of the true scope of payments made by a company.
- The BEIS proposes to require reporting firms to include their payment practices and performance reports in their directors’ report: Currently, no such disclosure is required leaving investors or other stakeholders insufficiently informed about a company’s payment practices and culture. An inclusion in the report would additionally raise awareness of the issue both among company staff and stakeholders.
- The BEIS proposes to redefine the recording dates for payments when supply chain finance is used: Such change is deemed to be necessary to counteract any potential distortion of payment practices involving contracts where a third party trade financing services (promptly) pays the amounts due on behalf of its client.
- The BEIS proposes to require the reporting of disputed invoices: Such reporting would enable suppliers or clients along the value chain to assess firms‘ dispute culture when it comes to paying their bills.
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As the above noted proposals only present the key issues addressed in the consultation, please refer to the original document for more detailed, comprehensive information.