More than half of Scotland’s big businesses are breaching new government regulations intended to address concerns among smaller companies over late payments, according to a study published today.
Research by professional services firm KPMG also revealed that, across the UK, the average time taken by large enterprises to pay suppliers’ invoices is nearly 50 days, with one-third failing to settle punctually.
The UK Government’s Payment Practices and Performance Reporting (PPPR) regulations, aimed at cutting the “severe administrative and financial burdens” firms are subjected to by not being paid on time, came into force last April.
The new scheme acknowledged that, in the worst cases, late payment can lead to insolvency.
Applicable to companies meeting two of three size criteria, including annual revenues of £36million, balance sheet asset totals of £18million and an annual average of 250 employees, the legislation requires them to report on a half-yearly basis on their payment practices, policies and supplier payment performance. The information they provide is publicly available online.
Although by this month 17 Scottish registered companies had filed in the first round of reports, for accounting periods beginning April 6 to June 1 last year, KPMG said its research suggested more than twice as many should have.
Alan Flower, a director in KPMG’s regional advisory practice, said the firm expected the slow uptake in reporting and the initial results of its research to be “of concern to the small businesses community.”
He added: “The new PPPR legislation appears to have flown below the radar, as we’re finding levels of awareness among the corporate community much lower than expected. However, we’re observing a degree of tolerance from the government as companies respond to the new requirement. The reports filed by the end of last year still only number around 250 businesses across the UK and the reporting regime is still very much in its infancy.
“Nevertheless, the statistics make for some interesting reading. On average, suppliers are paid punctually only around two-thirds of the time and the average time to pay invoices overall is approaching 50 days.”
KPMG estimates in total 900 Scottish businesses are required to file PPPR reports.
