Guidance

Guidance to reporting on payment data in directors' reports

Published 30 December 2025

Introduction

Every year, thousands of businesses experience severe administrative and financial burdens because they are not paid on time. Late payment is a significant issue for business, especially smaller businesses, as it can adversely affect their cash flow and jeopardise their ability to trade. In the worst cases, late payment can lead to insolvency.

The Reporting on Payment Practices and Performance Regulations 2017 (SI 2017/395) and the Limited Liability Partnerships (Reporting on Payment Practices and Performance) Regulations 2017 (SI 2017/425), place a duty on the large companies and LLPs to report on their payment practices, policies and performance each year.

The duty currently requires companies to report prescribed data about payment via a government portal, twice within the financial year, beginning on or after 6 April 2017. The precise information that they must publish is set out within Schedule 1 to the 2017 Regulations. This includes information about when payments are due and what percentage of payments were not made as planned.

The Companies (Directors’ Report) (Payment Reporting) Regulations 2025 (SI 2025/1152) require large companies to report some of the information reported under the Reporting on Payment Practices and Performance Regulations 2017 within directors’ reports produced under the Companies Act 2006.

This increases the transparency of payment performance to a company’s board and stakeholders. Auditors of a company have a broader responsibility regarding additional information – such as payment performance data – presented in the annual report alongside the annual accounts. Under the Companies Act 2006, the auditors must state in the audit report whether the directors’ report is consistent with the audited accounts and confirm whether any material misstatements have been identified in the directors’ report.

Legal disclaimer

This document has been prepared to provide general guidance only. The interpretation of the law on the duty to publish information on payment practices and performance is ultimately a matter for the courts. Users of this guidance should seek their own legal advice where appropriate.

Contact us

For queries relating to the reporting requirements and this guidance, contact paymentpracticesreporting@businessandtrade.gov.uk.  

Who needs to report

The regulations apply to companies which are:

• not in their first financial year
• large companies, that is, they do not qualify as small or medium-sized (as determined by section 465(2) and 466(2) Companies Act 2006.

In the context of the reporting requirement, ‘company’ means a company formed and registered under the Companies Act 2006 or previous legislation. These regulations do not apply to limited liability partnerships (LLPs).

Size criteria for the reporting requirement

At the time of publishing, companies that exceed 2 or more of the following thresholds will not qualify as being medium-sized:

• £54 million annual turnover
• £27 million balance sheet total
• 250 employees

Where the company is a parent company, it will not qualify as medium-sized if it exceeds 2 or more of the following thresholds:

• aggregate turnover: £54 million net (or £64 million gross)
• aggregate balance sheet total: £27 million net (or £32 million gross)
• aggregate number of employees: 250

Parent companies

Any company which has one or more subsidiaries is a parent company. A parent company will have to report in financial years for which both the parent itself and the group that it heads have exceeded relevant size criteria.

Parent companies must in certain circumstances prepare a group directors’ report and include information about their subsidiaries within this report.

Where a group directors report is prepared with this information there is no requirement for the subsidiary to individually report on its own payment practices and performance. Parent companies are able to do this where:

• the company is a subsidiary at the end of the financial year
• the group directors’ report of the parent company includes the subsidiary
• the group directors’ report of the parent company covers the same financial year as that of the subsidiary, that is, the parent company’s report must cover the same financial year ending at the same time or before the end of the subsidiary’s financial year

A parent company can exclude any information from the group directors’ report that relates to a subsidiary that is in its first financial year or qualifies as small or medium-sized.

What needs to be reported

These regulations require the following payment data headlines to be included in the directors’ report.

1․ A narrative description of the company’s standard payment terms, which must include:

• the standard contractual length of time for payment of invoices to suppliers
  
• any changes to the standard payment terms in the reporting period
  
• how suppliers have been notified or consulted on these changes
  
  

2․ The average time taken to make payments in the reporting period, from the relevant day.

This is the average (mean) number of days within which payments are made under qualifying contracts during the reporting period.

To find the mean, add the number of days it took to make all payments to be reported, and divide it by the number of those payments.

All payments that are made under a qualifying contract, during the reporting period, should be included.

Invoices that a company has received but has not yet paid should not be included in the figure. These payments should be reported in the reporting period in which they are paid, should the reporting company still be in scope of the requirement.

Example

Company A made 5 payments in 10 days, made 5 payments in 20 days, and had 5 invoices outstanding at the end of the reporting period. The outstanding invoices are not included so Company A would report that the average time taken to make payments in the reporting period was 15 days.

5 invoices × 10 days = 50 days

5 payments × 20 days = 100 days

50 days + 100 days = 150 days (time taken to make all payments)

150 days divided by 10 qualifying payments = 15 days average

3․ The percentage of payments made within the reporting period which were paid in 30 days or fewer, between 31 and 60 days, and in 61 days or longer.

A company needs to report on what proportion of the payments they made within the reporting period, under qualifying contracts, were paid:

• between day 1 and day 30 (including day 30)
• between day 31 and day 60 (including days 31 and 60)
• on or after day 61
• outside of agreed payment terms

All payments that are made under qualifying contracts during the reporting period must be included.

Any invoices that are received but not paid in the reporting period should be recorded in the reporting period in which they are paid. For example, if an invoice was received in the middle of the reporting period and was not paid before the end of the reporting period, it would not be included in the figures for that report. It would only be included if it had been paid.

The proportion paid in each timeframe should be worked out by calculating the number of payments made within each specified timeframe as a proportion of the total number of payments made in that reporting period. The percentage will only reflect the numbers of payments made, not the value of those payments. The 3 figures should add up to 100%. You may need to round each figure up or down.

Example

Company A made 10 payments in 20 days, 6 payments in 29 days, 2 payments on day 45 and made one payment on day 60 and one on day 70. There were several payments or invoices due which were not paid.

Company A would therefore report that they paid 80% of payments in 30 days or less, 15% between 31 and 60 days, and 5% beyond 60 days. The outstanding payments would be recorded in the subsequent reporting period(s) in which they were made.

10 + 6 = 16 payments made in 30 days or fewer (80% of total 20 payments)

2 + 1 = 3 payments made between 31 and 60 days (15% of total 20 payments)

1 payment made beyond 60 days (5% of total 20 payments)

4․ The sum of payments made during the reporting period which were paid in 30 days or fewer, between 31 days and 60 days, and in 61 days or longer.

These figures must be reported when the financial year starts on or after 1 January 2026.

Companies need to report on the total sum of payments made within the reporting period, under qualifying contracts, during the following periods:

• between day 1 and day 30 (including day 30)
• between day 31 and day 60 (including days 31 and 60)
• on or after day 61

All payments that are made under qualifying contracts during the reporting period must be included.

Any invoices that are received but not paid in the reporting period should be recorded in the reporting period in which they are paid. For example, if an invoice was received in the middle of the reporting period and was not paid before the end of the reporting period, it would not be included in the figures for that report. It would only be included if it had been paid.

The sum paid in each timeframe should be worked out by calculating the total sum of all invoices paid in full within each specified timeframe as a proportion of the total number of payments made in that reporting period.

Example

During the reporting period, Company A made a payment of £15,000 on the 19th day to a supplier, paying them in full within their agreed terms. They also made a payment of £4,000 to another supplier on the 28th day, paying them in full within the agreed terms.

£15,000 + £4,000 = £19,000 was paid in 30 days or fewer

Company A made a payment of £10,000 to another supplier on the 70th day after agreeing a contact, which was paid in full within agreed terms.

Company A therefore: £10,000 was paid on or after day 61

No payments were made between the 31st and 60th day of a contract.

In total, the company made £29,000 of payments during the reporting period.

£19,000 between 0 and 31 days: 66%

£0 between 31 and 61 days: 0%

£10,000 was paid after 61 days: 34%

5․ The sum of payments due within the reporting period which were not paid within the agreed payment period.

This figure must be reported when the financial year starts on or after 1 January 2026.

This is the sum total of the payments contractually required to be made within the reporting period, which were not paid within the agreed payment period. As payments may have been made outside the reporting period, this is a separate set of data from that required to calculate the other statistics.

The agreed payment period is the period within which the customer is required to pay the supplier. It is usually set out in the contract, but there may be instances where it depends on details in the invoice or other documents. It may be explicitly negotiated or may form part of standard contract terms.

This part of the reporting covers every payment due in the reporting period in question which is not paid in the agreed payment period. This includes invoices or payments which are under dispute, if they have not been paid in the agreed payment period.

If an invoice was already overdue at the beginning of the reporting period, it should not be included. This is because it will already have been reported in the previous report (if one was published) and does not need to be reported twice.

The length of the agreed payment periods (for example, whether this was 10 or 120 days) is not recorded in this part of the reporting.

Example

Company A had a contract in place to pay a supplier £9,000 within 30 days. Company A made an initial payment of £7,000 to this supplier on the 27th day, but didn’t pay their supplier the remaining £2,000 until the 45th day after agreeing a contract.

The £2,000 was not paid within agreed terms.

6․ The proportion of payments due within the reporting period which were not paid within the agreed payment period.

This is the percentage of the payments contractually required to be made within the reporting period, which were not paid within the agreed payment period. As payments may have been made outside the reporting period, this is a separate set of data from that required to calculate the other statistics.

The length of the agreed payment periods (for example, whether this was 10 or 120 days) is not recorded in this part of the reporting. The value of any payments is also not reflected in the calculation.

Example

Company A has a standard contract which requires it to pay suppliers in 60 days. In a particular reporting period, there are 15 payments which fall due under qualifying contracts, which were all made on Company A’s standard terms (that is, day 60 for each of these payments falls within the reporting period). Company A paid the suppliers on day 65 in 5 cases, and on day 55 in 10 cases.

Assuming there were no other payments due to other suppliers in the reporting period, Company A would therefore report that 33% of its invoices were not paid within the agreed payment period.

How statistics should be reported under this guidance

Some of the payment data headlines require you to count the days taken to pay. For these statistics:

• day 1 is the day after the date on which the company receives an invoice or other notice of the amount to pay
• the period ends when the supplier receives the payment, unless delayed by circumstances outside of the control of the business reporting in which case it ends when the supplier would have received the payment if the delay had not occurred

Example

Company A pays Supplier B by bank transfer which usually takes 3 working days, but there is an electronic fault at the bank, so the payment takes 5 working days.

For the purposes of the reporting requirement, Supplier B should have received the payment on the third working day, if not for circumstances outside of the control of Company A.

Reporting these statistics when supply chain finance is used

There may be cases where supply chain finance is used, so that the supplier receives the payment from a finance provider or other third party rather than from the reporting entity itself.

If the supplier receives the full amount due without having to pay a fee or having any amount deducted from the payment, the date the payment is considered made is the date on which the supplier received the payment from the supply chain finance provider.

If the supplier does not receive the full amount or has to bear the cost of any fee for the supply chain finance, the date the payment is made is the date on which the supply chain finance provider received the payment from the qualifying business (discounting any delays outside of the qualifying company ’s responsibility).

In all other circumstances, the date the payment is made is the date when it is received by the supplier (discounting any delays outside of the qualifying company responsibility).

Example 1

Company A is going to pay its supplier, Company B, in 60 days. It offers Company B supply chain finance so that it might be paid in 15 days. This supply chain finance is cost free and Company A does not deduct any money from the final sum owed to Company B in order to use it.

Therefore, Company A could report that the number of days taken to pay Company B is 15.

Example 2

Company C is going to pay its supplier, Company B, in 60 days. It, too, offers supply chain finance so that Company B might be paid in 15 days. However, it charges 3% of the total amount owed to use supply chain finance.

Whether Company B chooses to use supply chain finance or not, the number of days taken to pay is the day when payment is received from Company C by the finance provider.

If the reporting company does not have information about when the supplier receives the payment from the third party, payment is made on the date on which it is received by the third party from the reporting company.

Reporting these statistics where an invoice is not present

There are some situations where a supplier does not send the customer an invoice for a payment under a qualifying contract. In these cases, companies must count the time for payment with day 1 being the day after notice of an amount for payment is received.

These situations include contracts where payment is triggered by the receipt of a time sheet setting out work carried out under an ongoing contract for services.

For construction contracts in scope of the Housing Grants, Construction and Regeneration Act 1996 or the Construction Contracts (Northern Ireland) Order 1996, companies must use the earliest point at which they have notice of an amount for payment.

This would generally be the date they receive an application for payment or, in cases where there is no application for payment, the date on which they receive a payment notice (or default payment notice) or on which they issue a payment notice – whichever is earliest. Day 1 of the time taken to pay will be the day after the day on which the company has this notice.

Where the information needs to be reported

The information needs to be reported in the company’s directors’ report.

Glossary of terms used

Average

The (mean) for the number of days within which payments are made under qualifying contracts during the reporting period.

Contract

A contract may be defined as an agreement between 2 or more parties that is intended to be legally binding. When a company buys goods or services from another company, both parties generally enter into a contract. A contract could be written, verbal or both.

Contractual length of time

The standard payment period for the company to make payments.

Parent company

Any company which has one or more subsidiaries is a parent company .

Payment period

The period in which a company is contractually required to pay a sum.

Qualifying contracts

A qualifying contract is a contract which satisfies all of the following:

• it is sufficiently linked to the United Kingdom
• it is not for financial services (outlined here: Duty to report: guidance to reporting on payment practices and performance

In practice, this means that financial services businesses will only report on contracts not relating to financial services (for example, contracts for other services and goods such as office supplies).

Businesses contracting to receive financial services will also not report on those contracts but must include contracts for other services in their reporting.

Receipt of invoices

When the business receives the invoice whether by email, post or other means. This is not the date on which the invoice is entered on to the business’s software system, unless this process happens on the same day as the invoice is received.

Standard payment terms

Payment terms that the company uses, or where the company does not use standard terms, the company’s most frequently used payment terms.