The CBI has set out in detail its position on the issue of late payment in response to a government consultation.
Late payment is an issue that affects businesses of all sectors and sizes, but especially growing firms.
Now the CBI, which previously called for companies to publish payment information online, wants businesses to go further and to include this data in their annual reports so information can be reported to Companies House to help with company comparisons.
John Cridland, CBI Director General, says:
“The vast majority of businesses know that good supplier relationships are important for success. But there is still too much bad practice out there that must be challenged — we need to encourage and foster a prompt payment culture as it supports growth and jobs.
“We want to see companies publishing simple information online and in their annual reports about their payment practices because it shines a light on this important area and makes good business sense from an investor and supplier perspective.
“Reporting payment information will help show that larger companies are keeping their word by giving suppliers greater opportunity to challenge unfair terms.
“But we also need to make sure we steer clear of creating accidental perverse incentives that might encourage companies to extend their payment terms to reduce the proportion of those paid late.”
The CBI’s response to the Government’s consultation Business payment practices: duty to report also argues that:
Companies should report annually on the proportion of invoices they pay late and their average time to pay
Narrative reporting should clearly explain their standard and maximum payment terms
The Government’s own reporting mechanisms should be strengthened, as highlighted recently by the National Audit Office
Join the debate here and on twitter @bizdebate