The U.K.’s Duty to Report regulations came into effect this week, but new research from Bottomline Technologies says the current supplier payments climate continues to harm small businesses.
Reports Thursday (April 6) said the regulation requires large companies and LLPs to make public information about their B2B payment practices. The legislation also makes noncompliance a criminal offense, with businesses and their directors at risk for a fine if they don’t publish the information.
The rules aims to boost transparency in the supplier payments space, in which large corporates are notorious for forcing lengthy payment terms on their small suppliers to hold onto cash as long as possible. The situation has forced a cash crunch on suppliers, often SMEs, analysts say.
The data says that, too.
The same day Duty to Report came into effect, Bottomline released new research on the issue of late payments in the U.K. According to the report, 38 percent of financial professionals say a general ethic of slow payments among large corporates is their top challenge to getting invoices paid on time. That figure rises to nearly half when focused on SMEs.
As for reasons why invoices are paid on time, nearly half of the survey respondents said the reason can be traced back to collaborative relationships with corporate buyers — even more so than other ways to get invoices paid, like facilitating direct debit or integrating supply chain financing deals.
“The Duty to Report rules are a wakeup call not only to large businesses, but to every business,” said Bottomline Technologies General Manager, Payments Ed Adshead-Grant in a statement. “Not only is there an onus to ensure payments are promptly made to suppliers within agreed timescales, but there’s also a bold reminder to businesses that they have a right to payment without undue delay.”
“Modern payment technology is one way businesses can introduce more visibility on cash flows and facilitate effective dialogue between customers and suppliers to solve any payment issues quickly,” he added.