The Companies (Directors’ Report) (Payment Reporting) Regulations 2025

What does this mean?

Large companies have been required to report information on their supplier payment policy and performance publicly twice a year since 2017 through a Government portal (this requirement appears to be staying in place).  This legislation requires similar disclosures to be included in the Directors’ Report as set out in Schedule 7 to the Large and Medium-sized Companies and Groups (Accounts and Report) Regulations 2008, aiming to increase transparency and encourage better payment practices to smaller suppliers. 

Overview of the requirements

Broadly this applies to contracts with UK suppliers for anything other than financial services – see ‘qualifying contracts’ below. The required disclosures are as follows:

• A statement describing the payment period, in days, in the company’s standard payment terms. If the company does not have standard payment terms, then the terms most frequently used should be stated;
• A statement describing where the company has varied the standard payment terms, details of the change and details of any consultation with the suppliers before making the variation;
• A statement of:
  • The average number of days taken to make payments, where day 1 is the first day after the ‘relevant day’.
  • The percentage and sum of payments that were made in specified categories: 1-30, 31-61 and over 61 days.
• For payments falling due within the reporting period, a statement of both the percentage and sum of the payments that were not made within the period.

Qualifying contracts are:

• Not contracts for financial services; and
• Governed by the law of a part of the United Kingdom or would be if the parties had not elected to apply a foreign law.

The relevant day is the day that the company receives the invoice or notice of amount for payment, not the day it is posted to the accounting system or approved for payment. Clients will need to review their process to ensure that the calculation of the number of days is based on the correct starting date.

Where a finance provider is used for supplier payment, special rules apply, aimed at basing timing on the date at which payment is received by the supplier.

Who is it applicable to?

This applies to all UK incorporated/registered companies, except for those qualifying as small or medium.

Exemptions are available for a company’s first reporting period, regardless of entity size, and for subsidiary entities whose UK parent produces a group directors’ report including their data. The group report does not need to include the data for any individual company that would not be required to report based on its own size category.

When is it effective?

This is effective for accounting periods beginning on or after 1 January 2026

Where can I get more guidance?

The legislation is available at  The Companies (Directors’ Report) (Payment Reporting) Regulations 2025.

Guidance on the related reporting requirements in terms of calculations can be found here Duty to report: guidance to reporting on payment practices and performance - GOV.UK. Please note this is not directly related to the Companies Act requirements described above.