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G1-6 – Payment practices

🗂️ ESRS G1 Business Conduct, page 6-7

  1. The undertaking shall provide information on its payment practices, especially with respect to late payments to small and medium enterprises (SMEs).

  2. The objective of this Disclosure Requirement is to provide insights on the contractual payment terms and on its performance with regard to payment, especially as to how these impact SMEs and specifically with respect to late payments to SMEs.

  3. The disclosure under paragraph 31 shall include:

(a) the average time the undertaking takes to pay an invoice from the date when the contractual or statutory term of payment starts to be calculated, in number of days;

(b) a description of the undertaking’s standard payment terms in number of days by main category of suppliers and the percentage of its payments aligned with these standard terms;

(c) the number of legal proceedings currently outstanding for late payments; and

(d) complementary information necessary to provide sufficient context. If the undertaking has used representative sampling to calculate the information required under point (a), it shall state that fact and briefly describe the methodology used.

Application Requirements

Section titled “Application Requirements”

AR 16. In some cases, the undertaking’s standard contractual payment terms may differ significantly depending on country or type of supplier. In such cases, information about the standard terms per main categories of suppliers or country or geographical region could be examples of additional contextual information to explain the disclosures in paragraph 33(b).

AR 17. An example of what the description of standard contract term disclosures in paragraph 33(b) could look like:

ABC’s standard contract payment terms are payment on receipt of invoice for wholesalers which encompass approximately 80% of its annual invoices by value. It pays for services received within 30 days after receipt of the invoice which are about 5% of its annual invoices. The remainder of its invoices are paid within 60 days of receipt except for those in country X which in accordance with the marketplace standards are paid within 90 days of receipt.