The UK Government recognises that thousands of organisations experience severe administrative and financial burdens because they are not paid on time.
Consequently, all large UK companies now have a duty to report publicly on their payment practices, policies and performance.
Although the regulations were introduced in 2017, there are still many organisations and charities that are non-compliant. Requirements are on-going and have had a lot of attention from various bodies over the last twelve months.
Are you affected?
The requirements apply to charitable companies (including companies limited by both shares and by guarantee) and community interest companies which meet two of the following criteria:
- Revenue >£36m
- Total assets >£18m
- Employees >250
More information can be found here.
What does this mean?
A charity that meets the above criteria may be required to publish a report on the BEIS government portal.
In a standard financial year there are normally two reporting periods, each covering six months of the respective financial year. For non-standard financial years, such as shortened or extended periods, the reporting requirements and therefore the corresponding deadlines may differ. The information required must be published within 30 days of the end of the reporting period.
The regulations note that should an organisation fail to publish their report or provide false information in a report, it is deemed a criminal offence and the company and directors will be liable to a fine on summary conviction. That said, BIES have commented that it will “generally seek to encourage a business to comply with the reporting requirement before steps are taken to prosecute”.
Trustees of charities that meet the criteria, or indeed are close to the thresholds, should ensure they are familiar with requirements and ensure their charities are meeting their Duty to Report. Trustees should also reflect on the metrics that are being reported and consider whether their charity is performing at acceptable levels, how their reporting might be viewed by third parties and stakeholders, and whether their payment policies and procedures are robust.
Should any of the above questions raise any queries, BDO is well equipped to provide support and guidance with regards to these regulations and wider working capital issues.
Please contact one of the team to discuss further - Jenny Shutt or Ross McWhir.