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Payment Practices and Performance Regulations

About the regulation

The Government has identified that the late payment of undisputed invoices is a significant problem for UK businesses.

According to Department for Business, Energy & Industrial Strategy (BEIS), as of June 2015, over £26bn of late payments were owed to small and medium-sized enterprises (SMEs) in Britain, these late payments clearly impact cash flow and can jeopardise solvency.

The reporting on Payment Practices and Performance Regulations (referred to as Regulations here) came into force on 6 April 2017. The Regulations do not prescribe maximum payment terms, but rather introduce a new requirement for transparency intended to promote a culture of better payment practices.

The Regulations require companies and Limited Liability Partnerships (LLPs), which meet two or more of the size thresholds, to publish specific information regarding their current payment practices and performance. This increased transparency will enable potential suppliers to comparatively evaluate and make more informed decisions about who they choose to do business with.

A business will qualify and have a duty to report in relation to a financial year if, on the balance sheet dates for the two preceding financial years, it met two or more of the size thresholds: has an annual turnover of £36mn; balance sheet total of £18mn and has 250 employees.

The Regulations are in addition to the existing voluntary Prompt Payment Code and the latest of a series of new reporting requirements that seek to influence corporate behaviour by requiring increased disclosure (for example, gender pay gap reporting under The Equality Act 2010).

Once companies and LLPs (referred to as businesses here) have gathered and understood their current state and initial data, they need to assess the impacts to all areas of their business. Click on the three areas below, which will reveal questions your business will need to consider.

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How does disclosing this information impact your wider reputation as a responsible business?


What will the impact on liquidity of working capital be if, as a result of the Regulations, payments are made faster than today?


How do you compare to your competition and what is the likely impact of the disclosures on your supplier relationships?

What are the reporting requirements?

Businesses are required to provide the following information in relation to the reporting period on This will provide suppliers and other interested parties with a single place to access the information and compare performance.

The report must be approved by a director of the business before it is published.

Which contracts should be reported on?

Businesses that meet the thresholds are required to publish information about their payment practices and performance in relation to qualifying contracts.

According to the Government’s guidance, a qualifying contract is a contract which satisfies all of the following:

  • It is between two (or more) businesses
  • It has a significant connection with the UK
  • It is for goods, services or intangible property, including intellectual property
  • It is not for financial services

Whether a contract has a significant connection with the UK will depend on the circumstances. Examples include a contract that is performed in the UK, or where one or both parties is established in the UK or conducts a relevant part of their business in the UK.

Financial services covers any service of a financial nature, including (but not limited to) insurance related services, banking services and other financial services.

1. Sources: “New research from The Peterson Institute for International Economics and EY reveals significant correlation between women in corporate leadership and profitability.” EY website,, accessed on 8 February 2016.
2. Sources: Women Matter: A corporate Performance Driver, McKinsey & Company, 2007; Global Gender Gap Report 2014, World Economic Forum.
3. Sources: Scaling up: why women-owned businesses can recharge the global economy, EYGM Ltd, 2009; Global Gender Gap Report 2014, World Economic Forum.
4. Sources: “When Women Rule, Nations Prosper,” Columbia Business School website,, accessed on 6 January 2015; Global Gender Gap Report 2014, World Economic Forum.
5. Sources: The Credit Suisse Gender 3000: Women in Senior Management, Credit Suisse Research Institute, August 2012; Global Gender Gap Report 2014, World Economic Forum.