Original recommendation

The Brydon Review recommended that directors report to shareholders on their company’s payment policies and performance and that this be subject to some level of audit, as described in the company’s Audit and Assurance Policy. (Source: Brydon 21.5)

Proposal

A specific option being considered in the White Paper (Section 3.3) is to require the annual reports of PIEs to provide a summary of how the company – or group in the case of a parent company – has performed with regard to supplier payments over the previous reporting year, and to comment on how this compares to the year before that. This could be achieved by requiring companies to include this information in their strategic report.

The Government suggests at this stage that companies in scope could be required to summarise (at a group level in the case of parent companies):

• the company’s supplier payments policy, including its standard payment terms and shortest and longest standard payment period;
• the percentage of the company’s supplier payments that met its standard terms and, where this figure is less than 80%, an explanation of why this occurred and what actions the company plans to take to improve its payments record; and
• where such an explanation was required in the previous year’s annual report, an update in the following year’s report on the actions that were taken to improve the payments record and any additional steps proposed.

Government response

The Government has completed a statutory post-implementation review of the existing Reporting on Payment Practices and Performance Regulations 2017. As confirmed in that review, the Government now intends to consult on whether these regulations should be amended to further enhance transparency and accountability in supplier payment reporting.