The government has recently published an explanatory memorandum on its proposed Reporting on Payment Practices and Performance (Amendment) Regulations 2024.

These draft regulations will amend the Reporting on Payment Practices and Performance Regulations 2017 (the Payment Regulations). As we have previously reported here, these impose requirements on large companies and limited liability partnerships to publish certain information on their payment practices in relation to paying suppliers. The Payment Regulations sit alongside the Late Payment of Commercial Debts (Interest) Act 1998, which is the legislation entitling suppliers to receive statutory interest on overdue amounts. The proposals reflect continuing concern that especially for smaller businesses, late payment and long payment terms from larger customers remain a real problem that needs to be further addressed.

Based on the memorandum, currently the key points of the draft regulations are:

Duration - the Payment Regulations are extended to 6th April 2031 - at the moment they are due to cease effectiveness on 6th April 2024.

Additional reporting requirements - in scope businesses will be required to additionally report on such matters as the:

• proportion of disputed invoices that result in payments being made outside the agreed payment terms
• monetary value of the invoices they have paid 
• percentage of payments which were paid: in < 30 days; 31 to 60 days and > 60 days 
• percentage of payments due which were not paid within agreed terms

Supply chain finance
Given the growth of this as a payment mechanism, the proposals' aim is for this to be reported on more clearly. In particular, a supplier will only be treated as having received payment at the time it receives the finance company funds if the supplier is able to access the finance without cost.

The government expects that these additional requirements, when combined with the existing reporting requirements, should enable small businesses to be better informed about the behaviour of their customers.  

The proposals have yet to be enacted, so it unclear exactly when they will come into force.