The UK's largest companies from tomorrow will need to spill all on their processes for paying suppliers, or risk being slapped with an unlimited fine.
The Reporting on Payment Practices and Performance Regulations require large companies and limited liability partnerships to report twice a year on their payment policies and performance, including the average time taken to pay invoices.
The criminal offence for failing to publish the information extends beyond the company to individual directors found to be responsible. The new laws also contain an offence for publishing information which is false or misleading.
The Department of Business, Energy and Industrial Strategy will be responsible for investigating any breaches of the rules and bringing proceedings as needed.
"The failure of so many big businesses to pay their smaller suppliers promptly and fairly causes serious financial anxiety," said Federation of Small Businesses national chairman, Mike Cherry.
"Our research found around 50,000 small businesses a year become so squeezed by poor payment practices they end up closing down. These delays are often the result of supply chain bullying and it is time to call out the bullies."
Figures published in January by payments processor Bacs point towards some £26.3bn being owed to small businesses in overdue payments, while nearly half of the UK's smaller firms experience problems with late payments.
"This new offence is designed to alleviate the mischief caused to suppliers by late payment of debt," said Jo Walsh, senior associate at Kingsley Napley. "It is aimed at larger companies who will face criminal prosecution and unlimited fines for non or misreporting of payment practices. Individual company directors too should be aware they are liable to conviction and an unlimited fine."
Tony Duggan, chief exec of financing company Crossflow Payments, added:
This is a big stick from the government to drive up standards in payment practices after years of concerns about large businesses using their bargaining power to pay suppliers late knowing they will face no consequences.
The regulations form part of a package of measures announced by the government earlier this year to help small businesses solve disputes. The Department of Business, Energy and Industrial Strategy is also on the hunt for the UK’s first small business commissioner, who will champion small businesses and back them in payment disputes with bigger clients.