MANY Scottish businesses are contravening new supplier payment regulations introduced by the UK Government, according to a business services group.

KPMG in Scotland has found that fewer than half of corporates required to file under the Payment Practices and Performance Reporting (PPPR) have done so.

The legislation came into force on April 6 and introduced a requirement for larger companies and limited liability partnerships (LLPs) across the UK to report on a half-yearly basis their payment practices, policies and supplier payment performance through a publicly-accessible online service.

First reports under the legislation were due last November and December highlighted that as at January 5, only 17 Scottish-registered firms had filed.

KPMG’s analysis suggested the figure should have been significantly higher – it had expected more than twice this number based on historical statutory filings.

The regulations, which were announced three years ago, were designed to address growing concerns, particularly among the small and medium-sized enterprise (SME) community, about the severe administrative and financial burdens experienced from not being paid on time.

It also acknowledged that in the worst cases, late payment could lead to insolvency, a point echoed by the Association of Business Recovery Professionals (R3), whose own analysis in 2016 found that one in every five insolvencies had overdue payment from customers as a key contributing factor.

The regulations apply to companies meeting two of three size criteria, and include annual revenues of £36 million, balance sheet asset totals of £18m, and an annual average of 250 employees.

In total, KPMG estimates the number of Scottish businesses who meet the criteria to be around 900.

Metrics companies must now include reports on their average time to pay invoices and the percentage of invoices not paid on time. The rules also require businesses to disclose more controversial practices, such as whether they charge contractors to remain on supplier lists, allowing suppliers the ability to review the payment practices of potential partners. The public spotlight is expected to encourage slow-paying businesses to improve their payment performance as they will be visible and comparable to competitors.

Alan Flower, a director in KPMG’s regional advisory practice, said: “The new PPPR legislation appears to have flown below the radar, as we’re finding levels of awareness amongst 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.

Flower continued: “KPMG in Scotland will be monitoring and reporting on the Scottish results quarterly and will also assist the larger corporate community to meet their reporting obligations under the new legislation.”