The thesis: the reporting year is open, so the fix is still cheap.
On 30 October 2025 the Department for Business and Trade made the Companies (Directors’ Report) (Payment Reporting) Regulations 2025. They came into force on 1 January 2026 and have effect for a company’s financial year beginning on or after that date, which means a large UK company on a calendar year is roughly seven months into the first period it will have to report. Nothing is filed yet. The data, on the other hand, is being created every working day.
That timing is the opportunity. Every figure the new Part 9 asks for resolves to three dates and one contractual term, and the statutory definitions do not point at the fields an accounts payable ledger usually treats as authoritative. The count starts the day after the invoice was received by the company. The clock stops when the supplier received the money. The line between on time and late is the last day of the payment period in the individual contract. A company that starts capturing those cleanly in August has four months of clean data and eight months to reconstruct, which is a manageable project. A company that starts in January 2027 has a year of estimates and a conversation with its auditor.
What the new disclosure actually asks for.
The Regulations work by inserting a new Part 9 into Schedule 7 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, the schedule that sets out what a directors’ report has to contain. Six statements are required, and they split across two different populations of payments, which is the first thing worth noticing.
| Statement | What it covers | Population |
|---|---|---|
| Standard payment terms | The payment period in the company’s standard payment terms for its qualifying contracts, expressed in days. Where those terms were varied during the year, the details of the variation and the details of any notification or consultation with suppliers beforehand. | Contract and procurement records |
| Average time to pay | The arithmetic mean number of days taken to make payments under qualifying contracts within the financial year, counting from the day after the relevant day. | Payments made in the year |
| Payments by band, as a percentage | The percentage of those payments made within day 1 to day 30, within day 31 to day 60, and on or after day 61. | Payments made in the year |
| Payments by band, as a value | The sum total of those payments falling in each of the same three bands. | Payments made in the year |
| Paid outside terms, as a percentage | The percentage of payments falling due within the financial year that were not made within the payment period. | Payments falling due in the year |
| Paid outside terms, as a value | The sum total of payments falling due within the financial year that were not made within the payment period. | Payments falling due in the year |
Payments made in the year and payments falling due in the year are not the same set. An invoice received in November on 60 day terms is paid, and counted, in the following financial year, while an invoice received in March and never paid still lands in this year’s outside-terms figures. Any model that treats the two as one population will produce a percentage that cannot be tied back to a ledger, which is an awkward position for a number the board has to approve.
Two exemptions keep the scope sensible. The disclosure is not required for a company’s first financial year, nor for a year in relation to which the company qualifies as medium-sized. Since 6 April 2025 those thresholds have been turnover of not more than 54 million pounds, a balance sheet total of not more than 27 million pounds, and not more than 250 employees, meeting two of the three. There is also a group exemption, and it has a condition that is easy to read past: a subsidiary is out where it is included in a group directors’ report prepared for a parent financial year that ends at the same time as, or before the end of, the subsidiary’s own year. A subsidiary with a non-coterminous year end does not get it.
Three dates, and none of them is the obvious one.
The interpretation paragraphs are short and they carry most of the operational weight. Read as a data specification rather than as drafting, they say something quite specific about which fields have to exist.
| The date | How it is defined | What it is not |
|---|---|---|
| The relevant day | The day the company receives an invoice or otherwise has notice of an amount for payment. Day 1 is the first day after it. | Not the invoice date printed by the supplier, not the date the document was posted, and not the date it cleared approval. An invoice sitting in a shared mailbox for nine days has already spent nine days of the count. |
| The payment period | The period in which the company is contractually required to pay a sum. A payment falls due on the last day of it. | This is a term of the individual contract. A supplier master record carrying a default payment terms code is a convenience, and where the two disagree the contract is the one being measured. |
| The day payment was made | When it is received by the supplier. Where a supply chain finance arrangement applies, when the finance provider receives it from the company. | Not the payment run date and not the date you instructed the bank. Any delay in receipt for which the company is not responsible is deemed away, so a genuine rail outage does not count against you, but ordinary settlement time does. |
The supply chain finance rule is worth reading twice, because it is the one place the regulations move the finish line in the company’s favour. Where a supplier draws part payment of an invoiced sum from a finance provider before the end of the payment period and the company then settles the invoiced sum with that provider, the payment counts as made when the provider receives it. That is a sensible treatment, since the supplier already has its money. It only works if the arrangement is identifiable from the transaction record, which in most ledgers today it is not.
There is a similar quiet allowance for delay. Where part or all of a payment is received late for a reason the company is not responsible for, it is deemed made when it would have been received. A rail outage on the settlement date is the obvious case. It is a genuine protection and it is also the kind of field that becomes meaningless if it is used often, so it deserves a reason and evidence attached rather than a flag anyone can set.
Two reports now run side by side, from one dataset.
The annual disclosure did not replace anything. The largest UK companies and limited liability partnerships have published payment practices twice a financial year since 2017, on the government web service, within 30 days of the end of each reporting period. That duty continues, and it grew in March 2025 when a second schedule was added covering retention clauses in qualifying construction contracts.
The annual disclosure reuses four of the twelve portal items and leaves the rest behind. Anyone tempted to produce the directors’ report block by reformatting the second half-year filing should look at the row list first.
| Item | Portal filing | Directors’ report |
|---|---|---|
| Standard payment terms and any variation | Yes | Yes |
| Average days to pay, and the three payment bands by count and by value | Yes | Yes |
| Payments falling due that were not paid within terms, by count and by value | Yes | Yes |
| Percentage not paid within terms because of a dispute | Yes | No |
| Maximum payment period in any qualifying contract entered into during the period | Yes | No |
| The dispute resolution process for supplier payment | Yes | No |
| Whether supply chain finance is offered, and whether invoices can be submitted and tracked electronically | Yes | No |
| Whether the company signs a payment code of conduct, and its name | Yes | No |
| Charges deducted for a supplier to stay on the supplier list, as policy and as fact | Yes | No |
| Retention clauses in qualifying construction contracts | Yes | No |
| Covering period | Each reporting period, normally two per financial year | The financial year |
| Deadline | 30 days from the end of the reporting period | With the annual report |
| Also applies to limited liability partnerships | Yes | No |
Then there is the arithmetic. Sum totals add across the two halves of a year. An average number of days does not, unless both halves contain the same number of payments, and the band percentages have exactly the same problem because they are shares of a count. The only safe construction is to derive every annual figure from the underlying payments, treating the two portal filings and the annual disclosure as three views of one dataset rather than as a chain where each is built from the last.
One definitional detail is easy to miss and worth settling early. In the portal schedule, standard payment terms means the terms the company uses for that type of qualifying contract. In the new Part 9 the same definition appears without those words, so the annual statement is asking for the company’s standard payment period rather than a set of them by contract type. A company running genuinely different standard terms across divisions should decide now how it will express that in a single statement, and keep the decision with the paper the board approves.
The record that answers both regimes.
All of this collapses into a fairly small extension of an invoice record. The point of writing it down as fields is that each one has an owner and a source system, and most of the work is upstream of finance rather than inside it.
invoice_received_at
The relevant day. Stamped once, on arrival at the company rather than on arrival in the ledger, and never overwritten by a re-post, a credit note or a resubmission. This is the single field most likely to be missing today and the one that cannot be reconstructed after the year closes.
contract_id and payment_period_days
The payment period as agreed in the contract that governs this invoice, held against the contract rather than inherited from the supplier record. Groups that buy the same category on two different agreements need both to survive into the ledger.
due_at
The last day of the payment period, derived rather than typed. Deriving it means the band arithmetic and the outside-terms test agree with each other by construction.
settled_at
The date the supplier received the funds. Where that is not directly observable, a documented and consistently applied basis for it, plus the payment rail used, so the basis can be explained rather than defended.
finance_provider_id
Present when a supply chain finance arrangement applies, because the payment is then treated as made when the finance provider receives it from the company. A blank field and a genuine absence need to be distinguishable.
qualifying_contract flag
Whether the contract meets the statutory test. Contracts for financial services are outside it, and the governing law conditions decide the rest, so this is a legal attribute that belongs in master data rather than a filter written into a report.
dispute_raised_at and dispute_resolved_at
The portal filing asks for the share of late payments caused by a dispute, and the forthcoming statutory time limit for raising one gives these dates a second job. Recording when the dispute started is what makes both answerable.
delay_not_attributable flag
The regulations deem a payment made when it would have been received, where the delay is one the company is not responsible for. Rare, so it needs a reason field and evidence rather than a checkbox anyone can tick.
Example payment record for one invoice
{
"invoice_id": "GB-INV-2026-0041872",
"supplier_id": "SUP-10442",
"contract_id": "MSA-2024-118",
"qualifying_contract": true,
"invoice_dated": "2026-05-28",
"invoice_received_at": "2026-06-04",
"payment_period_days": 45,
"due_at": "2026-07-19",
"paid_instructed_at": "2026-07-16",
"settled_at": "2026-07-20",
"settlement_basis": "bank_confirmed_credit",
"days_to_pay": 46,
"band": "31_to_60",
"paid_within_terms": false,
"finance_provider_id": null,
"dispute_raised_at": null,
"delay_not_attributable": false,
"amount_gbp": 18450.00
}The example is deliberately unremarkable. An invoice dated 28 May arrives on 4 June, so day 1 is 5 June. The governing agreement says 45 days, so it falls due on 19 July. Payment is instructed on 16 July, comfortably inside terms on the view most ledgers would take, and the supplier receives it on 20 July. Measured the way the regulations measure it, that invoice took 46 days and was paid outside terms. Nobody did anything wrong. The settlement date simply was not the field anyone was watching.
The same fields are about to carry money.
The reporting change arrived alongside a much larger one. A public consultation on poor payment practices ran from 31 July 2025 to 23 October 2025 and drew 867 responses, the government published its response on 24 March 2026, and the Commercial Payments Bill was introduced to Parliament in May 2026. The Department for Business and Trade describes it as the most significant legislation on late payments in over 25 years, and frames the problem as costing the UK economy 11 billion pounds a year with 38 businesses closing every day.
A ceiling on payment terms
A maximum payment term of 60 days between businesses, with a limited set of exemptions. The government response names the intended exemptions: contracts where both parties are large companies, contracts where the purchaser is the smaller party, and goods or services being imported or exported. A reduction to 45 days was consulted on and is not being taken forward now, with any further reduction to be consulted on again.
Interest that cannot be contracted away
A right to statutory interest at 8 percent above the Bank of England base rate in all commercial contracts, with the ability for parties to agree an alternative remedy removed. Unpaid interest can be escalated to the Small Business Commissioner and resolved through adjudication.
A deadline for raising a dispute
A statutory time limit for raising disputes, with compensation payable to the supplier where a purchaser raises one late or without sufficient information. A dispute becomes a dated event with a consequence rather than an open-ended hold.
Retentions in construction
A prohibition on deducting and withholding retention payments under the terms of a construction contract, with a further consultation on the timing of implementation.
Reporting on interest
Additional requirements in secondary legislation for large companies to report the value of interest they are liable to pay and the value actually paid, which the government describes as a trigger for investigation and for fines linked to the scale of unpaid interest.
Board-level commentary
A requirement for boards or audit committees of large companies that paid a significant proportion of payments late to publish commentary on GOV.UK covering why performance is poor, the intended actions, and which actions from previous commentary were not implemented and why.
Read that list next to the data model and the overlap is close to complete. Statutory interest at 8 percent above base rate is calculated from a due date and a settlement date. A dispute deadline is calculated from a receipt date. A 60 day ceiling is a constraint on the payment period held against a contract. Reporting the interest a company is liable to pay, as distinct from the interest it actually paid, is a derived figure over the same three dates. The work that makes the annual disclosure true is the same work that makes the Bill straightforward when it lands.
Have your say. Comment below with your question and our Small Business Commissioner will answer a selection of the most popular questions about the Late Payments Bill.
The government has said the measures will have an appropriate lead-in time including a transition period, and that they will not apply retrospectively, with payments, contracts and disputes judged against the rules in place at the relevant time. That is a helpful posture, and it also means the useful preparation is the part that is already required.
Implementation checklist.
Stamp the relevant day at the front door. The count starts the day after the company receives the invoice or otherwise has notice of an amount to pay, so the timestamp has to come from the intake channel, whether that is the AP mailbox, a supplier portal or an EDI feed, and it has to survive every later reprocessing of the document.
Move the payment period onto the contract. The disclosure is about qualifying contracts, and a payment terms code inherited from the supplier master will quietly misstate the due date wherever a specific agreement says something different. Where a supplier trades on two agreements, the invoice needs to know which one it belongs to.
Decide, document and apply one basis for the settlement date. Payment is made when the supplier receives it, which is not a date most ledgers hold. Faster Payments, Bacs, CHAPS and international rails all behave differently, and an approved basis applied consistently across the year is far easier to stand behind than a basis chosen at reporting time.
Flag supply chain finance arrangements at contract level. Where a supplier draws early payment from a finance provider and the company settles with that provider, the payment counts as made when the provider receives it. That is a favourable treatment and it needs evidence, so the arrangement should be identifiable from the transaction rather than from memory.
Mark which contracts are qualifying contracts. Contracts for financial services sit outside, and the governing law tests decide the rest. Holding the answer as a master data attribute keeps the population stable between the two half-year filings and the annual report.
Rebuild the annual figures from transactions, never from the two portal filings. Sum totals add up across halves. An arithmetic mean of days does not, unless both halves happen to contain the same number of payments, and band percentages have the same problem. One dataset, three derivations.
Reconcile the two populations before anyone asks. Payments made in the year and payments falling due in the year are different sets, and an invoice received in November on 60 day terms falls due in the next financial year. A short bridge between the two is worth writing once.
Start capturing dispute dates now. The portal filing already asks for the share of late payments caused by a dispute, and the Bill adds a time limit for raising one with compensation attached. A dispute with a start date is the only version of a dispute either regime can read.
Give the numbers an owner and a review before the year ends. The directors’ report is approved by the board and the portal filing is approved by a named director, so a quarterly dry run during the first year in scope is much cheaper than a surprise in the audit file.
Model the 60 day ceiling against your current terms now, while it is still a bill. Sorting contracts by payment period, spend and counterparty size shows quickly whether the exposure is a handful of agreements or a category-wide renegotiation, and the answer changes how much lead time you need.
Sequence it by what expires. The receipt timestamp and the settlement date come first, because every day they are not captured is a day that has to be estimated later. Contract level payment periods come second, since they can be extracted from agreements at any point but change the due date on everything downstream. The reporting derivations and the reconciliation between the two populations come third, and they are a reporting exercise that can be built once the underlying fields are trustworthy.
Constructive failure modes to design around.
Treating the invoice date as the start of the clock. It is the day the company receives the invoice that matters, so a supplier that dates an invoice on the first and emails it on the twelfth has not used eleven of your days. Reading the wrong field understates your own performance and makes the number impossible to reconcile with a supplier query.
Letting the supplier master define the payment period. The measurement is per qualifying contract. A single default of 30 days across a supplier who actually trades on 45 and 60 day agreements produces a due date that is wrong in both directions and an outside-terms percentage that cannot be traced back to anything.
Reporting the payment run date as the payment date. Payment is made when the supplier receives it. Instructing on a Friday afternoon and reporting that Friday is a small error on one invoice and a systematic bias across a year, and it moves invoices across the 30 day boundary in exactly the population that matters most.
Averaging the two half-year averages to get the annual figure. It only works when both halves contain the same number of payments. The fix is to derive every annual figure from the underlying payments, which also gives the audit trail the board approval needs.
Assuming the annual disclosure is a copy of a portal filing. It reuses four of the twelve portal items and drops the rest, including the dispute percentage, and it covers a different period. Building it as a reformat of an existing filing bakes in both a period error and a scope error.
Assuming a subsidiary is automatically covered by the parent. The exemption applies where the subsidiary is included in a group directors’ report prepared for a parent financial year that ends at the same time as, or before the end of, the subsidiary’s year. A non-coterminous year end quietly removes it, and the portal duty was never lifted anyway.
Leaving the first year in scope to run without a dry run. The relevant day and the settlement date are not fields you can backfill in a spreadsheet in month twelve. Whatever is not being captured today becomes an estimate later, which is a harder conversation with an auditor than a fix in month eight.
Every one of these is a field problem rather than a payment problem. The company that pays its suppliers well and captures the wrong dates will publish figures that understate its own performance, and the company that captures the right dates finds out in month eight rather than in the audit. That asymmetry is why the data work is worth doing before the policy work.
What to ask ERP and accounts payable vendors now.
Can the platform stamp an invoice receipt timestamp at the point of intake for every channel you use, including email, supplier portal and EDI, and keep that timestamp immutable across reprocessing?
Does an invoice carry a contract reference and take its payment period from that contract rather than from the supplier master, and can it distinguish two live agreements with the same supplier?
Can the system record a settlement date distinct from the payment instruction date, and store the basis on which it was determined for each payment rail?
Are supply chain finance arrangements modelled at contract level, so a payment to a finance provider can be treated correctly and evidenced?
Can qualifying contract status be held as a master data attribute and reported on, rather than applied as a filter inside one report?
Does reporting derive average days, band percentages and band values from the underlying payment population for any date range, including a full financial year and each half of it?
Can it produce the two populations separately, payments made in a period and payments falling due in a period, and reconcile between them?
Are dispute raised and resolved dates first-class fields, and can the platform report the share of late payments attributable to a dispute?
Can it list every open contract by payment period and annual spend, so a 60 day ceiling can be modelled before it is law?
A platform that stamps receipt at intake, takes payment terms from the contract, records a settlement date with a stated basis, and derives the figures from transactions for any period has already built what both regimes need. The judgements that remain, which contracts qualify and how standard terms are described in a single statement, belong with legal and company secretarial teams, which is where they should sit.
Practical takeaway.
Payment performance became something a UK board signs off in an annual report, and it will shortly become something that carries statutory interest and a regulator with the power to fine. Both of those rest on the same small set of facts: when the invoice arrived, what the contract said, and when the supplier got paid. The first financial year in scope is still open, and August is a good month to check whether those three facts are being recorded properly, because they are the only part of this that cannot be recovered later.
Sources.
- legislation.gov.uk: The Companies (Directors’ Report) (Payment Reporting) Regulations 2025, S.I. 2025/1152, made 30 October 2025
- legislation.gov.uk: Reporting on Payment Practices and Performance Regulations 2017, Schedule 1, the twelve items published to the portal
- legislation.gov.uk: Reporting on Payment Practices and Performance Regulations 2017, Schedule 2, retention clauses in qualifying construction contracts
- legislation.gov.uk: Reporting on Payment Practices and Performance Regulations 2017, regulation 5, which companies the portal duty applies to
- legislation.gov.uk: Companies Act 2006 section 465, the medium-sized thresholds as substituted on 6 April 2025
- GOV.UK: Commercial Payments Bill overview, Department for Business and Trade, published 19 May 2026
- GOV.UK: Late payment consultation, time to pay up, government response published 24 March 2026
- GOV.UK: Duty to report on payment practices and performance, Department for Business and Trade guidance
Every rule, definition, threshold and date above comes from the legislation and the government publications linked here, read in full rather than in summary. One public post on X is quoted, from the Office of the Small Business Commissioner on 13 August 2026, and it was opened and verified before being cited. A wider set of practitioner posts could not be assembled honestly: a logged out view of an X profile exposes only the five most recent posts, which put the relevant announcements from May 2026 out of reach, and nothing has been invented to fill the gap. The Commercial Payments Bill was before Parliament at the time of writing, so its measures are described as intended rather than as law.