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The Payment Reporting Regulations – what to know, what to do

Updated: Feb 16

From 6th April 2017, new regulations will come into force requiring all large UK companies to prepare and publish reports on their payment practices, policies and performance. UK Limited

Liability Partnerships (LLPs) will be similarly obliged under the Limited Liability Partnerships Act 2000.


Nearly half of all SMEs in the UK have experienced problems with late payment; it’s estimated that they have over £26 billion owed to them. Prompt payment could save fifty thousand businesses a year from closing.

The new regulations are intended to encourage a culture of openness and transparency on payment practices.

Who is covered by the Regulations?

The requirements cover all large companies and Limited Liability Partnerships that have been formed and registered in the UK.

A large company is defined as a company/LLP which exceeds two or more of the qualifying thresholds:

  1. a turnover of £36 million;

  2. a balance sheet total of more than £18 million;

  3. More than 250 employees on average during the reporting period.

In addition to thresholds that apply to individual companies, parent companies will also need to look at the group threshold levels.

A business will have two reporting periods in the financial year, each of six months. The Regulations require reports to be made no more than thirty days after the reporting period ends.

So, a business whose financial year begins on 6th April 2017 will have to submit their first report by 4th November 2017.

What should be in the report?

If a business is covered by the requirements, it will need to publish information about its payment practices, policies and performance as they relate to ‘qualifying contracts’ (see below).

The report should include descriptions of the company’s standard payment terms, statistical information about late payment of invoices, and statements about the business’s process for resolving payment.

A director or designated member of staff should approve the report before it is published.

What are qualifying contracts?

These include all business-to-business contracts for goods and services except where the contract is for financial services or where it does not have a significant connection to the UK.

How to publish the report

As mentioned earlier, the report has to be filed no later than thirty days after the relevant six-month period has expired. After it has been filed, it will be published on a government website. This is intended to make it easier for SMEs to find out details about the companies with whom they do business.

Failure to comply

If the reporting requirements are not met, the company and every person who was a director of the qualifying company immediately before the end of the filing period commits an offence. However, it is a defence for a director to prove that s/he took all reasonable steps for ensuring that the reporting requirements would be complied with before the end of the filing period.

If a person knowingly or recklessly –

(a) publishes or causes to be published, for the purposes of the regulations, a report or any information, or (b) to make, for any such purpose, a statement,

that is misleading, false or deceptive, they will be committing an offence.

The penalty for these offences will be a fine not exceeding level 5 on the standard scale.

Prosecutions can be brought up to three years after an offence.

In the Explanatory Memorandum to the Regulations, it states that the businesses will generally be encouraged to comply with the reporting requirement before prosecution is contemplated. This implies that only businesses who are persistently non-compliant or commit serious breaches of the regulations will be prosecuted. However, it is unwise to base a reporting strategy on this implication.

It goes without saying that criminal proceedings will also have a marked effect on the reputation of the business as a whole.

What should employers do?

If a business has its financial year beginning on or after 6th April 2017, it will be covered by the requirements of the regulations.  It is a good idea for all businesses to start early preparations for the new reporting requirements.

Some key steps to consider:

  • Work out whether the duties apply to the business, which contracts will be affected and when the regulations will start applying to the organisation.

  • Make sure that the business has processes in place which will monitor payment performance.

  • Ensure that records of payment terms and policies are clear and concise.

  • Make sure that staff who are involved with making payments have received training in how to comply with the requirements.

  • Provide information to company directors on the risk of being held criminally liable.

  • Businesses should check the threshold criteria to determine whether they are covered by the regulations.

  • It is also wise to carry out an ongoing review process as businesses grow and may well fall under the requirements at a future point, even if they don’t currently do so.

  • Establish the following procedure and have it approved by the Board so that compliance with the requirements can be ensured:

  1. Appoint a person to prepare the report

  2. Look into payment practices and contract performance so that the appointee can gather the information they need to complete the report

  3. Make sure that the report is prepared in good time so that its accuracy can be assured

  4. Appoint a director or senior member of the business to approve the report before it is published.

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To find out how we can help your business, please call 01482 296 800 or email

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