Payment Performance Report 2017/2018
Introduction LMH is pleased to present payment performance information in accordance with Regulations made under Section 3 of the Small Business, Enterprise and Employment Act 2015. LMH meets the criteria as laid out in Companies Act 2006 Section ((465) 3 ) as a medium-sized enterprise on the following basis: Criteria
Requirement
Annual Turnover
in excess of £36 million
Balance Sheet Total
in excess of £18 million
Number of Employees
250 or more
Ensuring that our supplier base is paid within the agreed terms and payment period is a matter of pride for LMH. We work hard to ensure that contractual terms are met and disputes are kept to a minimum. LMH takes the viability of Small and Medium-sized Enterprises (SMEs) into account and, where possible, will consider amending payment terms were necessary. As required by the Duty to Report on Payment Practices and Performance the following statistics have been calculated and included in this report: 1. Average number of days taken to make payments during the 2017/18 reporting period 2. Percentage of payments made within the reporting period which were paid within set period 3. Percentage of payments due within the reporting period which were not paid within the agreed payment period. All calculations have been made using the Guidance set out in the above report. Information is also provided about LMH’s standard terms of payment and dispute resolution process.
01 I LMH Payment Performance Report
The Facts
LMH Group Standard Payment Period In accordance with LMH Group Financial Regulations, the contractual payment period is 30 days following the end of month the invoice is received for Goods and Services. This complies with the Government Prompt Payment code, which requires invoices to be paid within 60 days. As detailed in the Duty to Report on Payment Practices and Performance Guidance, a “Qualifying Contract” for the purpose of compiling statistics is defined as: I. being between two (or more) businesses II. sufficiently linked to the United Kingdom (explained in paragraphs 36-40) III. for goods, services or intangible property, including intellectual property IV. not for financial services The Standard Payment term for qualifying contracts is stated in contracts as follows: “Within 30 days of the receipt of the undisputed invoice from the Service Provider” 97% of LMH supplier base is subject to the standard payment term. These payment terms have been varied for individual suppliers through the reporting period. In instances were SMEs have alternative payment terms, LMH works with the supplier to agree the most appropriate payment period. This has meant payment periods being at 7, 14 or 21 days. Agreement to these variations are made via the signed contract and communicated to the Supplier as part of the negotiation and award process. In the case of Construction contracts, payments are made in line with the timescales set out in the revised Section II of the Construction Act 1996. This includes the provision for stage payments for consultants as well as Developers under Design and Build contracts. Further allowance is made for payments of a one-off nature if the provision is a single requirement or of an urgent nature as agreed and authorised by a Group Executive Director. These payments account for 2% of LMH supplier base. LMH also takes into account the need for different payment periods for IT Goods and Services, for which payments may be required in advance or split. Average Number of Days Taken to Pay from Receipt of Invoice Figure 1. (below) shows the average number of days taken to make payments from the date of receipt of invoice. The table reflects the number of payment terms that have been used within the reporting period. This is due to payments made in line with the Construction Act timescales, specifically those at 21 and 28 days. These figures suggest that we are receiving invoices between 12 and 23 days after the invoice date, meaning they are due almost immediately upon receipt. Terms
Paid in Average Number of Days
30 Days
7
28 Days
14
21 Days
8
14 Days
2
Figure 1.
LMH Payment Performance Report I 02
Percentage of Invoices Paid within the Reporting Period Figure 2 shows the percentage of payments made within the reporting period: Percentage of Invoices Paid 30 days or less 31-60 days 61+ days
Figure 2.
The Graph shows that 86% of LMH invoices are paid in 30 days or less. This includes where payments are made on a single payment basis and those where SME’s have shorter payment terms. 12% of paid invoices attribute to 0.8% of the supplier base with payments between 31-60 days. 2% of invoices were not paid within the reporting period agreed.
03 I LMH Payment Performance Report
Invoice Resolution LMH acknowledges that there are times when invoices can be disputed normally by the Client. At these times, communication is the key to ensuring a speedy resolution. Qualifying contracts include a dispute resolution clause and an escalation process including timescales to address any issues relating to either the product/service or an instance such as disputed invoices. This also provides details of the relevant LMH Contract Manager, who acts as the single point of contact for the performance and management of the contract. For some contracts the submission of invoices are included as part of the Key Performance Indicator targets. Additionally, invoice processing and payment issues are included as standard items on Contract review meetings. This enables both parties to raise any issues that have not been resolved previously. In the event an invoice is disputed by the LMH Contract Manager under a qualifying contract, the supplier is advised as soon as possible. The LMH Contract Manager is responsible for concluding the issue with the Supplier and ensuring any actions taken comply with the Group Financial Regulations. LMH Procurement will advise should there be a dispute relating to the timing of payments and the agreed contract terms. The LMH Contract Manager will discuss with the Supplier and document the outcome to resolve the dispute. Should the escalation process need to be used then the relevant Senior LMH Contract Manager will be required to resolve the matter. In the unlikely event the issue cannot be resolved at this level, Group Executive Directors will be involved with the use of Dispute Resolution from an outside organisation as the last resort.   STATEMENTS Statement Provision Of E-Invoicing
Yes
No
x
Availability Of Supply Chain Finance
x
Deduction Of Payments For Supplier Lists
x
Member Of A Code*
x
*As a Public Sector organisation LMH Group complies with the undertakings required of the Prompt Payment code.
LMH Payment Performance Report I 04
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