Every year, thousands of businesses experience severe administrative and financial burdens, simply because they are not paid on time. Late payment is a key issue for business, especially smaller businesses as it can adversely affect their cash flow and jeopardise their ability to trade.
In order to make sure businesses are paid on time the government have introduced a regulation for the UK’s largest companies and LLPs to report on a 6 monthly basis on their payment practices.
You only have to report on your payment terms and practices if your business exceeds at least 2 of the following criteria:
- £36 million annual turnover
- £18 million balance sheet total
- 250 employees
However, if your business exceeds 2 or more of these criteria you need to report on your payment practices every 6 months; the information must be published through an online service provided by the government.
So what exactly do you need to report on?
- Narrative description of:
- The business’ standard payment terms
- The business’ process for resolving disputes
- Statistics on:
- Average no. of days taken to make payments
- % of payments paid in 0-30 days, 31 to 60 days and 61 days or longer
- % of payments not paid within agreed payment period
- Statement about:
- Whether suppliers are offered e-invoicing
- Whether supply chain finance is available to suppliers
How can Dynamics NAV | 365 Business Central help with payment practices?
Dynamics NAV 2018 and Dynamics 365 Business Central already have the necessary functionality included in order to enable you to report on your payment practices. If you are on a version of Dynamics NAV prior to 2018 don't worry - The NAV | 365 People will be able to help you with these reporting requirements.
More information on this legislation can be found here