Could your academy trust be required to report on supplier payment performance?

Why academy trusts should take notice of the UK payment practices reporting regime

Audit & Assurance
Planning

Academy trusts are generally charitable companies limited by guarantee. Larger trusts should not assume they are outside the payment practices reporting regime and should assess their legal form and size against the statutory tests.

Why academy trusts should take notice

Prompt payment of suppliers is increasingly viewed as an important measure of organisational effectiveness, governance and financial stewardship.

The UK Payment Practices and Performance Regulations require larger companies and LLPs to report publicly on their payment practices, policies and performance. The regime was introduced to increase transparency and address the challenges that late payments can create for suppliers, particularly smaller businesses.

Although the regulations are often associated with the commercial sector, academy trusts should not assume they are automatically exempt.

Are academy trusts within scope?

Academy trusts are typically incorporated as charitable companies limited by guarantee under the Companies Act 2006. The reporting regime applies to qualifying companies and LLPs that meet the relevant size criteria, regardless of whether they are private, public or quoted entities.

At the time of publication, an organisation is in scope for a financial year if, on its last two balance sheet dates, it exceeded at least two of the following thresholds:

Size criterion	Current threshold
Annual turnover	More than £54 million
Balance sheet total	More than £27 million
Average employees	More than 250

Many larger multi-academy trusts may exceed two or more of these thresholds and should therefore determine whether they have reporting obligations. The assessment should be performed carefully, using the statutory definitions and the trust’s figures for the relevant periods.

Even where a trust is not legally required to report, the underlying principles remain relevant from a governance, operational effectiveness and value-for-money perspective.

Why payment performance matters

Academy trusts rely on a broad range of suppliers to deliver education and support services effectively, including:

ICT and cyber security providers
Catering contractors
Facilities management providers
Educational consultants
Agency staffing suppliers
Curriculum and assessment providers
Local contractors and service organisations

Late payment can place unnecessary strain on supplier relationships and may create financial challenges for smaller businesses supporting schools and trust operations. Strong payment performance can also indicate that a trust has effective systems for recording, approving and settling its obligations.

An emerging governance indicator

Trustees and audit committees routinely review reserves, cash flow, budget forecasts and procurement outcomes. Payment performance is sometimes overlooked, despite providing useful insight into the effectiveness of financial processes and controls.

Questions trustees may wish to consider include:

How quickly does the trust pay supplier invoices?
What percentage of invoices is paid within agreed terms?
How many invoices become overdue?
Are there recurring approval delays?
Are payment issues concentrated within particular academies or departments?

The internal audit perspective

Supplier payment performance can be a useful indicator of the maturity of a trust’s financial control environment. When internal auditors review procure-to-pay processes, payment delays may highlight wider control weaknesses, including:

Inadequate purchase order controls
Inefficient invoice approval workflows
Poor segregation of duties
Resource pressures within finance teams
Weak supplier master data controls
Ineffective budget holder oversight

Conversely, consistent and timely processing may provide evidence of clearer accountability and more efficient financial processes. Payment performance can therefore be used as a diagnostic measure within internal audit reviews of financial management and operational effectiveness.

Supporting academy governance principles

The principles underpinning the government reporting regime align with academy sector expectations around regularity, propriety, value for money and stewardship of public funds.

Monitoring supplier payment performance may help trusts demonstrate:

Effective use of public resources
Strong financial management arrangements
Appropriate trustee oversight
Positive supplier relationships
A commitment to transparency and accountability

Should trusts report voluntarily?

The Government guidance states that organisations outside the statutory duty may follow the guidance if they wish to submit a report voluntarily. Formal publication may not be appropriate for every trust, but larger trusts may still benefit from monitoring key payment metrics internally through finance committee or audit and risk committee reporting.

Regular reporting can help trustees track performance, identify deteriorating trends, challenge inefficiencies and gain assurance over financial controls.

Practical steps for academy trusts

Confirm the trust’s legal form and whether it exceeds the statutory size thresholds.
Establish clear supplier payment targets and service standards.
Monitor average payment days and overdue invoice levels.
Review procure-to-pay processes for bottlenecks and control weaknesses.
Report payment performance metrics to trustees periodically.
Include creditor and payment controls within the internal audit plan.
Benchmark performance against relevant sector or organisational targets where suitable.

Final thoughts

For academy trusts, particularly larger multi-academy trusts, the first step is to understand whether the statutory reporting requirements apply. For all trusts, supplier payment performance is a useful indicator of governance, operational effectiveness and financial stewardship.

Put simply, how quickly a trust pays its suppliers may provide valuable insight into the strength of its financial management arrangements and its commitment to delivering value for money.

How Price Bailey can help

Price Bailey’s Internal Audit team works with academy trusts to provide independent assurance over financial management, procurement and governance arrangements. We can support trusts in assessing procure-to-pay controls, improving management information and strengthening trustee oversight.

Contact our Academy Internal Audit team to discuss a focused review of supplier payment performance and financial governance using the form below.

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information on this page is intended as a general guide only. While we work to keep our content accurate and up to date, we cannot guarantee that it reflects the position at the time you are reading it. No responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm. For more information on our editorial process, click here.

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