From April 2017, large businesses and limited liability partnerships (LLPs) will have to publish details twice a year on the average time taken to pay supplier invoices. It's part of a package of measures to tackle late payment.
Small business minister Margot James announced the new "Duty to Report" rules this week. The Government will publish guidance on how to comply early next year.
"Unfair payment practices and unnecessary red tape hamper [SMEs'] ability to grow and have no place in an economy that works for all," she said. "By shining a light on how large businesses pay their smaller suppliers, we want to empower small businesses and drive a real change in payment culture."
As of June 2015, the overall level of late payment owed to small and medium-sized businesses was reported as £26.8 billion. A recent survey by the Federation of Small Businesses (FSB) found that, on average, 30% of SME payments are received late.
Mike Cherry, FSB national chairman, said: "Tackling late payments is now a key part of the Government's corporate governance agenda. The comprehensive and regular Duty to Report is the first step to combat a business culture that feels like one where it is OK to pay small firms late. It is not OK - we estimate that 50,000 business deaths could be avoided every year, if only payments were made promptly - adding £2.5 billion to the UK economy."
Philip King, chief executive of the Chartered Institute of Credit Management (CICM), said: "The small business minister is to be applauded for engaging with and listening to organisations like the CICM and the Federation of Small Businesses in driving real change. The new Duty to Report will lead to much greater transparency and is clearly one of a suite of measures to improve payment practices, including the Prompt Payment Code, the appointment of a new Small Business Commissioner, and first and foremost, best-practice credit management."