Since January 2021, large companies have been requested to sign up to a government initiative that requires them to set out how effective they are at settling supplier payments.
This information can be a critical factor if you are a small company supplying goods or services to a larger concern and cannot afford to wait for extended periods for your invoices to be paid.
The changes that came into effect from January 2021are:
- requiring a company’s CEO or Finance Director, or the business owner where it is a small business, to personally sign the Code to ensure responsibility for payment practices is taken at the highest level of an organisation
- introducing a new logo for signatories to use in external communications to show their commitment to the Code, making it more damaging to a company’s reputation to breach it
- acknowledgement as a condition of signing the Code that suppliers can charge interest on late invoices
- enabling administrators of the Code to investigate breaches based on third-party information
In addition, the new requirement for signatories to pay 95% of invoices from small businesses (those with less than 50 employees) within 30 days will be effective from 1 July 2021.
The target for larger businesses will remain 95% of invoices within 60 days.
To make it easy to check the reports made by companies there is an online process on the GOV.UK website at https://www.gov.uk/check-when-businesses-pay-invoices.
Simply enter the name of your ‘large business’ customer to access their payment effectiveness reports, these display:
- the average time it takes for a large business to pay its suppliers, and
- the proportion of payments (for example, invoice payments) that it doesn’t pay on time.
If you are considering supplying goods or services to a large company for the first time, this facility should be used to check their payment history. As we have mentioned above, you may be anxious to take their business, but you need to know that your standard credit terms will be met.
- Mini-Budget 23 September 2022 - September 23, 2022
- Businesses face rebranding following Queens death - September 22, 2022
- Prepare your business for the next big challenge - September 20, 2022
- We need to do things differently says Chancellor - September 16, 2022
- Tough new rules to protect against cyber attacks - September 13, 2022
- Energy bill support for families and businesses - September 12, 2022
- Bungling bundling bank to repay businesses - September 6, 2022
- Tax Diary September/October 2022 - September 1, 2022