Compulsory reporting will be introduced with the Small Business, Enterprise and
Employment Bill, currently going through Parliament.

The proposed changes, unveiled by Business Minister Matthew Hancock, will provide robust information making it easier for small contractors to identify good and bad payers.

All publicly quoted companies and large private firms will be required to report on either the percentage or value of invoices paid later than 30, 60 and 120 days.

Under the present plan, a private company will fall within scope if it meets two of three fixed benchmarks.

These are: it turns over more than £25.9m, employs more than 250 staff or has a balance sheet worth of over 12.9m.

In the consultation process the Government is also asking for ideas about how to best define and record disputed invoices.

The Government is also looking at requiring firms to set out their standard payment terms, supply chain finance terms and membership of voluntary payment codes.

Business Minister Matthew Hancock said: “Tackling late payment is at the heart of our drive to help small businesses. Coming from a small business background, I know just how critical late payment can be for small firms’ cashflow.

“We know that small businesses are often reluctant to risk losing business by using the redress measures we’ve put in place, so we want to tackle the underlying culture by increasing transparency on payment practices and performance.

“The measures we are consulting on will make it clear to small businesses and consumers alike which large businesses behave properly, and those that think they can ride roughshod over their suppliers.”