Large companies to report on supplier payment practices in their directors’ reports

The Government has published regulations which will require large companies to report annually on their supplier payment practices and performance in their directors' reports. The content of the disclosures companies make will not materially change, but requiring companies to include this information in the directors' report in addition to on a web portal is intended to increase transparency and accountability.

Background

Large companies and LLPs have been required to report publicly twice a year on a government web service about their practices, policies and performance in relation to paying suppliers since 2017. This reporting is intended to encourage large businesses to pay suppliers promptly.

Following a consultation in February 2023, changes were made to extend the regulations for a further seven years beyond their original expiry date, and to require additional information to be reported. Although the requirement to report on payment practices in annual reports was consulted on, the previous government delayed bringing it in pending a wider review of non-financial reporting.

The change is part of a series of measures announced by the Department for Business and Trade in September 2024 designed to support small businesses by tackling late payment of invoices.

What is changing?

The new regulations will amend the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 to introduce a new requirement for large companies to report annually on their payment practices and performance with respect to suppliers.

In relation to qualifying contracts with suppliers, disclosures required by companies in their directors' reports will include:

• The payment period specified in the company's standard payment terms (in days) and details of any variations to standard payment terms.
• Information about payments made (including the average number of days taken to make payments).
• Information about late payments (including the percentage, and sum total, of payments not made within the payment period).

Timing

The draft regulations will come into force on 1 January 2026 and have effect for financial years beginning on or after 1 January 2026.

More information

Click here to view the draft Companies (Directors' Report) (Payment Reporting) Regulations 2025 and here for the explanatory memorandum.