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ESRS G1: Business Conduct·Disclosure Requirement G1-6
Payment Practices
Practical guidance for preparing this disclosure. Use this card to identify the information to prepare, verify claims and organise supporting evidence. For exact requirements, always refer to the official European Commission source.
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Prepared from official source material and published report evidence. No named approver is recorded yet, so this page carries no byline.
Use it alongside the official European Commission source while that review is in progress.
Standard
ESRS G1: Business Conduct
Disclosure Requirement G1-6 · 2026-5010-final
Last reviewed
—
LRA educational guidance · Not issued or endorsed by European Commission
To prepare this disclosure
Disclosure focus
This disclosure asks an organisation to explain how it pays its suppliers and other business partners in practice. The focus is on whether payment terms are clear, consistently applied and managed responsibly, including how quickly invoices are settled and whether there are any patterns of late payment, disputed payments or other issues that could affect counterparties’ cash flow.
In practical terms, the reporting should cover the organisation’s real payment behaviour across the business, not just a few well-run sites or a single flagship operation. The useful question is whether payment practices are embedded across relevant operations and purchasing arrangements, and whether the organisation can describe any significant differences by geography, business unit or supplier type.
This LRA educational guidance supports disclosure preparation. For the exact requirements, always refer to the official European Commission source.
Before you start
Before you start
A quick mental checklist before you prepare this disclosure — tick each as you settle it.
Preparation
Key information to prepare
| Preparation field | What to capture | Evidence hint | Owner |
|---|---|---|---|
| Standard payment period | Record the usual number of days the business allows before a supplier invoice is due for payment. | Credit terms in the ERP, supplier master records, contract templates, or approved purchasing terms. | Procurement / Accounts Payable |
| Small supplier terms | Capture whether the business applies any different payment conditions for smaller suppliers, and what those conditions are. | Supplier policy, procurement terms, supplier onboarding documents, or contract clauses for smaller vendors. | Procurement / Supplier Management |
| Invoices paid on time | Capture the share of payments made within the agreed payment period, using the same population and timing basis as the payment-term data. | Accounts payable ageing report, payment run data, and KPI dashboard showing invoices settled within terms. | Accounts Payable / Finance |
| Late payment cases | Capture the count of individual instances where payment was made after the agreed due date, for the reporting period. | Exception report from accounts payable, overdue invoice log, or aged payables analysis with case-level counts. | Accounts Payable / Finance |
＋ Show G1-6 sub-elements (LRA working checklist)
State the payment period in days.
Set out any terms that apply specifically to SMEs.
Report the share of payments made on time.
Give the number of cases.
How to prepare it
Set the reporting boundary first: decide which business units, legal entities, and supplier relationships are in scope for this disclosure, and make sure the same scope is used for every figure and narrative you report.
Agree the definitions before you start counting: specify what you will treat as standard payment terms, what qualifies as SME-specific terms, what counts as an on-time payment, and what you will count as a case for the period.
Pull together the source records: gather contract terms, invoice and payment logs, ageing reports, and any case-tracking records needed to support the four datapoints.
Calculate and draft the disclosure: record the payment-term days and any SME-specific terms in text form, then compile the percentage of payments made on time and the number of cases for the reporting period.
Explain any exclusions or changes: note any parts of the business or supplier base left out, any changes in method or scope from the prior period, and any assumptions used to bridge gaps in the records.
Check the final output against the source requirements: confirm that each required datapoint is present, the wording matches the underlying evidence, and the reported scope, definitions, and calculations are consistent throughout.
Request the data
Request payment-practice data from Accounts Payable
Translate the disclosure into an internal business question — then adapt it to your organisation's own language.
How do we pay suppliers in practice, including standard payment timing, any special terms for smaller suppliers, the share of invoices paid on time, and the number of late-payment cases in the reporting period?
Use your organisation’s own labels first, then map them to the reporting fields. For example, if you talk about suppliers, vendors, invoices, settlement runs, or small-business terms internally, keep that language in the request and only translate it afterwards for reporting.
Weak request
Please provide the ESRS G1-6 payment practices metrics for the reporting period.
Why it fails: This uses framework language only, so the owner may not know which internal reports, definitions, or systems to pull from. It also leaves out the boundary, timing basis, category labels, and supporting evidence needed to check the figures.
Better request
Please pull the AP report for [reporting period] covering [entity / business unit] and send the usual supplier payment timing, any separate timing for smaller suppliers, the share of invoices paid within terms, and the number of late-payment cases. Include the source system, the definitions you use internally, and any exceptions or manual overrides, plus the supporting extract.
Formal email template
Subject: Request for payment-practice data for [reporting period] Hello [name/team], We are preparing the sustainability reporting pack and need your help with the payment-practice information for [entity / business unit] covering [reporting period]. Please send the following in your own internal terms, with a short note explaining how each item is defined in your process: - The usual payment timing used for suppliers - Any different timing or terms used for smaller suppliers or equivalent internal category - The share of invoices paid within the agreed timing - The number of late-payment cases in the period Please also include: - The source system(s) used - The boundary covered - Any exclusions, overrides, disputes, or manual adjustments - A copy of the supporting report or extract A possible LRA training template is attached below for reference only; please adapt this to your organisation and check the source material before sign-off. Thanks, [preparer name]
Short Teams / Slack version
Hi [name], could you send the payment-practice data for [reporting period] for [entity/business unit]? Please use your own AP/supplier terms, and include the usual payment timing, any different terms for smaller suppliers, the share paid on time, and the number of late-payment cases, plus the source report and any exceptions. Thanks.
Industry examples
Manufacturing
Context. A plant-based group buys raw materials and indirect services through a central AP team.
Adapted request. Please send the AP extract for [reporting period] covering [group / site]. We need the normal supplier payment timing, any separate terms used for smaller suppliers, the share of invoices paid within terms, and the number of late-payment cases. Please include the ERP source, the internal definition of on-time payment, and any disputed or blocked invoices.
Example response. Attached: AP ageing report and payment-run export. Boundary: group finance. Standard timing: 45 days. Smaller-supplier timing: 30 days. On-time share: 92.4%. Late-payment cases: 18. Notes: 6 cases were blocked for dispute resolution; these are listed separately in the comments tab.
Retail
Context. A retailer pays a large supplier base through a shared services centre and tracks invoice performance by vendor group.
Adapted request. Please provide the shared-services report for [reporting period] covering [entity / business unit]. We need the usual vendor payment timing, any different timing for small suppliers, the percentage of invoices paid on time, and the count of late-payment cases. Please add the system extract, the vendor grouping used, and any manual payment holds.
Example response. Attached: invoice workflow dashboard export and AP summary. Boundary: UK retail operations. Standard timing: 30 days. Small-supplier timing: 14 days. On-time share: 88.1%. Late-payment cases: 27. Notes: 9 cases were delayed by stock-dispute holds; these are flagged in the extract.
Draft your disclosure
Notes that turn data into a disclosure
LRA training templates — adapt them to your organisation, and check the official source before sign-off.
Method note
We have used the payment terms applied in our contracts, including any separate arrangements for smaller suppliers, and measured punctuality using the share of invoices settled by the agreed date, with reported cases counted separately.
Context note
These figures show how quickly we ask suppliers to wait for payment, how often we meet those deadlines in practice, and how many payment-related issues were recorded during the period.
Fluctuation statement
If the figures move from one period to the next, we will explain whether that reflects changes in contract terms, supplier mix, payment processes, or the number of reported cases.
Content index entry
G1-6 Payment Practices — [location / page] / [notes]Download Centre
Preparation tools & forms
Professional preparation tools for G1-6 — free with an LRA Community membership. Register once (it's free) and every download unlocks, together with the Disclosure Library, templates and the LRA AI Assistant.
Assurance readiness
For each claim, check the evidence
| Claim | Risk | Evidence to check |
|---|---|---|
| We set out the usual number of days we allow each main supplier group to be paid, using our own internal supplier categories and a documented cut-off date. | An assurer will test whether the supplier groups are defined consistently, whether the day counts are based on the right contract terms, and whether the figure was calculated from the correct reporting period and population. | Supplier policy or payment-terms schedule; category mapping used for the disclosure; source system extracts or contract samples showing agreed terms; calculation workbook; period-end population report; review sign-off showing the figure was checked before publication. |
| We included a separate late-payment measure for small suppliers where that issue is material for this business, and we based it on entity-specific records rather than a generic group-wide proxy. | An assurer will probe whether the metric is genuinely specific to the reporting entity, whether the small-supplier population is defined and applied consistently, and whether the measure is material enough to justify inclusion. | Materiality assessment or reporting memo; definition of the small-supplier population; source data and calculation method for the metric; evidence of any exclusions or adjustments; management review notes; audit trail linking the published number to underlying records. |
| We calculated the share of payments made within the stated payment window from the underlying payment ledger, and we checked that the numerator and denominator match the same scope. | An assurer will test whether the percentage is mathematically correct, whether late and on-time payments are classified properly, and whether the scope of transactions used in the calculation matches the stated basis. | Payment ledger extract; calculation sheet showing numerator, denominator and formula; reconciliation to the general ledger or AP sub-ledger; controls over data completeness and classification; evidence of review and approval before release. |
| Where we use a different payment period for small suppliers, we disclosed that separate day count and kept the basis for that distinction on file. | An assurer will examine whether the separate term really applies to the small-supplier group, whether it differs from the terms used for other suppliers, and whether the distinction is supported by policy or contract evidence. | Supplier terms policy; contract templates or sample agreements for small suppliers and other suppliers; internal guidance explaining the different treatment; category mapping; evidence that the disclosed day counts were reviewed against source documents. |
| We counted only the legal cases that were still open at the reporting date and related to overdue supplier payments, and we excluded matters that had already been closed. | An assurer will check whether the count includes only live proceedings at the cut-off date, whether the cases are correctly linked to late-payment matters, and whether any duplicates or closed items were removed. | Legal case register; correspondence from legal counsel; case status reports at period end; criteria used to define an open case; reconciliation between the legal register and the published count; sign-off from legal and finance teams. |
Evidence pack to prepare
Common reporting gaps
Figures are stated without the supporting narrative, or narrative without figures.
Scope is inconsistent between the text and the numbers.
The reporting boundary is left undefined.
Material changes since the previous period are not disclosed.
Estimates and measured values are not distinguished.
Source records for the figures are not identified.
Common gaps
Mistakes to avoid when collecting the data
Wrong data ownerChasing the finance team alone can miss the contract or procurement owner who actually knows the payment terms and exception cases.
Framework language instead of business termsAsking for the data in disclosure jargon can leave teams unsure whether you mean standard supplier terms, special SME terms, or late-payment cases.
No clear scope boundaryPulling figures from every entity or region without first fixing the reporting perimeter can mix in payments that should sit outside the dataset.
Wrong period basisUsing invoice dates, approval dates, or a rolling window instead of one fixed reporting period can make the payment figures inconsistent.
Mixed counting methodCombining percentages, counts, and days in one extract without a single method can produce numbers that do not reconcile to the source records.
Source labels lostCopying values into a clean spreadsheet without keeping the original system labels can make it impossible to trace each figure back to the underlying record.
Populations merged togetherLumping ordinary suppliers and smaller suppliers into one pool can hide the separate treatment needed for the SME-specific terms field.
No evidence trailSaving the final numbers without the supporting extracts, date stamps, and reviewer sign-off can leave no audit trail for later checks.
Where judgement is often needed
Set the reporting perimeter after acquisitions and disposalsUse one clear cut-off for bought-in or sold businesses, explain whether their supplier payment data is included for the full period or only from the change date, and keep the same approach across the four data points.
Decide which supplier groups count as in-scopeState how you treat borderline suppliers such as small firms, group entities, agents or other intermediaries, and explain any local rule you use to decide whether they sit inside the payment-practice population.
Handle country-by-country payment terms differences consistentlyIf contract terms vary by market, describe the rule used to combine them into one figure or split them by geography, and explain any local legal or commercial differences that affect the result.
Choose a single basis for timing on-time paymentsExplain whether you measure against invoice date, due date, receipt date or another internal milestone, and make clear how that timing rule is applied to both the percentage and the case count.
Explain when estimates are used instead of direct recordsIf some payment data is not captured in the source systems, say which figures are estimated, how the estimate is built, and why it is a reasonable substitute for the missing records.
Show how rounding affects the published figuresState the rounding rule used for days, percentages and counts, and make sure the rounded outputs still align with the underlying totals and sub-totals.
Aggregate enough to protect sensitive supplier informationWhere a small supplier set could reveal individual counterparties, combine the data to a higher level and say that the grouping was done to avoid exposing private commercial information.
Explain how mixed payment terms are simplifiedIf standard terms and special terms both exist, describe the method used to produce one reported number for payment days and one for SME-specific terms, and note any weighting or averaging choice.
Examples
Illustrative examples
Synthetic, written by LRA — not from a company report, not text from any standard.
Illustrative (synthetic) example — Food processing
: we report how our supplier invoices are handled, including the standard payment window we use, whether smaller suppliers receive different terms, the share settled within the agreed date, and the count of late-payment cases. This is an illustrative disclosure for practitioner review, not a real company report.
Shows how to present supplier-payment practices in plain language, with a clear split between standard terms, SME-specific terms, punctual settlement performance, and the number of late-payment cases.
Illustrative supplier payment disclosure (days / % / count)
| Measure | Large suppliers | SME suppliers |
|---|---|---|
| Agreed payment window (days) | 60 | 45 |
| Use of different terms for smaller suppliers | 0 | 1 |
| Invoices paid by the due date (%) | 92 | 88 |
| Late-payment cases (count) | 12 | 5 |
Illustrative (synthetic) example — Construction materials
: we summarise our supplier-payment practice by showing the usual time allowed for payment, whether we apply a separate arrangement for smaller businesses, the proportion paid on time, and how many late-settlement cases we recorded. This is an illustrative disclosure for practitioner review, not a real company report.
Shows a second way to disclose the same payment information, using a different sector and different figures while keeping the same four data points.
Illustrative supplier payment disclosure (days / % / count)
| Measure | Standard suppliers | SME suppliers |
|---|---|---|
| Agreed payment window (days) | 75 | 30 |
| Use of different terms for smaller suppliers | 0 | 1 |
| Invoices paid by the due date (%) | 85 | 90 |
| Late-payment cases (count) | 18 | 3 |
Company reports
How companies report G1-6 in practice
Examples of full and partial reporting practice. These are evidence-led reviews, not exact disclosure templates to copy.
Terna S.p.A.
Electric Utilities / IPP / Energy Traders · Italy · 2025
Terna S.p.A.'s 2025 Annual Report provides a specific reported value related to payment terms, noting a comparison of days with 37 days in 2024 on page 370. The report mentions standard payment terms and payments made by bank transfer during 2025 (p.370), indicating some detail on payment practices. However, there is no clear or quotable evidence found elsewhere in the report regarding other narrative or numeric details for this disclosure.
Pirelli & C. S.p.A.
Automobiles and Components · Italy · 2025
Pirelli & C. S.p.A.'s 2025 Annual Report does not provide any quotable evidence or specific data related to the disclosure on anti-corruption or anti-bribery measures, as no narrative or numeric information was found in the report. While the report includes extensive financial data on payables, borrowings, and provisions (pp. 636, 684, 707), these do not address the disclosure topic. Therefore, the report lacks clear information on confirmed cases of corruption or related metrics, leaving this disclosure area unaddressed.
Danone S.A.
Food Production — Animal Source · France · 2025
Danone S.A.'s 2025 Universal Registration Document provides detailed information on payment terms used to calculate overdue payments, specifying contractual terms of 30 days from the end of the month and 60 days from the invoice date (p.161). The report also notes that there were no excluded invoices in dispute or not recognised, with zero number and amount of excluded invoices (p.161). However, there is no quotable evidence found regarding other narrative or numeric disclosures related to this topic elsewhere in the report.
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Scenarios to work through
A group has one standard supplier contract for larger vendors, but its procurement team also uses a shorter payment schedule for small and medium suppliers. The finance team can pull the usual settlement period from the contract system, but the SME arrangement sits in a separate policy note.
QWhich payment period should you describe, and how should you treat the SME-specific arrangement?
Reveal model answer →Hide answer ↑
Use the normal settlement period that applies in practice for the reporting period, and separately explain the different terms used for small and medium suppliers if those are in place. Keep the two arrangements distinct so readers can see both the general timing and any special treatment for SMEs.
Why this matters · Report the ordinary payment timetable and separately identify any different terms used for smaller suppliers.
At year-end, the accounts payable team has a dashboard showing that 87 out of 100 supplier invoices were settled by the agreed date. However, 12 of the late items were disputed invoices that were paused while the issue was resolved, and one was paid late because of a bank processing error.
QDo you present the 87% figure as-is, or do you need to think about how the late cases are counted?
Reveal model answer →Hide answer ↑
You should only present a percentage that reflects the way your organisation defines and tracks punctual settlement for the period, and you need to be clear about what sits behind the number. If disputed items or processing failures are treated differently in your internal reporting, make sure the figure and any explanation are consistent with that approach and do not overstate performance.
Why this matters · The percentage should match the way your organisation actually measures timely settlement, with any exceptions handled consistently.
A preparer is compiling the narrative and sees 14 late-payment incidents in the ledger. Eight relate to invoices from one supplier, three are from another, and the rest are spread across smaller vendors. The team is unsure whether to report the total count only or also break it down further.
QWhat should you do with the count of late-payment cases?
Reveal model answer →Hide answer ↑
Report the number of late-payment cases for the period as a single figure, using the same basis throughout the disclosure. If your internal records allow a breakdown and you choose to add one for clarity, it must still reconcile back to the total of 14 and should not change the main count.
Why this matters · Give one consistent total for late-payment cases, and any extra detail must still add up to that total.
The sustainability team has drafted a note saying the company pays suppliers within 45 days on average, but the finance system shows that the contractual terms are 30 days for most suppliers and 60 days for a subset of strategic partners. The draft also mentions that SMEs are on 30-day terms.
QHow should you avoid mixing up the different payment measures in the final disclosure?
Reveal model answer →Hide answer ↑
Separate the different ideas: state the agreed payment period in days, identify any special terms for SMEs, show the share of invoices paid on time, and give the count of late-payment cases. Do not use an average settlement period as a substitute for the agreed terms, because the disclosure is asking for distinct pieces of information rather than one blended metric.
Why this matters · Keep the contract terms, SME terms, punctual-payment share, and late-case count as separate data points.
Framework references
Relevant ESRS requirements and related disclosures
Available framework references and nearby disclosures relevant to preparing this requirement.
ESRS
G1-6
within ESRS G1: Business Conduct
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FAQ
Questions this page answers
For G1-6, what data do I need to gather before I draft the disclosure?+−
The page says to prepare four datapoints: standard payment period, small supplier terms, invoices paid on time, and late payment cases. Use the step-by-step preparation section to turn those into a draft and check the evidence pack before you finalise anything.
How do I set the scope for G1-6 business conduct payment data?+−
Use the page’s plain-language explainer and preparation steps to decide what sits inside the disclosure, then align the scope to the four listed datapoints. The page does not give a formal scoping rule, so you should document your own approach clearly in the workbook and evidence pack.
Who should own the G1-6 data collection for standard payment period and late payment cases?+−
The page is designed for sustainability/ESG managers, HR or data owners, and assurance reviewers, so ownership should sit with the people who can source and explain the payment data. The workbook and evidence pack are there to help you assign responsibilities and keep the trail clear.
What evidence should I keep to support a G1-6 draft for assurance?+−
The page includes an evidence pack with five items and five assurance claims to verify, each framed around claim, risk, and evidence. Use those items to build a file that shows where the numbers came from and how you checked them.
What are the common mistakes people make when reporting G1-6?+−
The page lists common reporting gaps and mistakes, so it is useful for checking whether your draft is missing a datapoint, using unclear wording, or lacking support. Review that section before you turn the data into a final narrative.
How do I use the G1-6 Prep & Assurance workbook?+−
The Download Centre includes a Prep & Assurance workbook in .xlsx format, which is meant to help you prepare the disclosure and organise assurance-ready evidence. Use it alongside the step-by-step preparation section and the evidence pack.
What should I put in the narrative for a G1-6 disclosure draft?+−
The page provides narrative starters in the draft-output section, so you can turn the collected data into a short written disclosure without starting from scratch. It also suggests visualisation ideas and a content-index line to help structure the draft.
Can I use the synthetic example disclosure on the G1-6 page as a template?+−
Yes, but only as an illustrative example: the page says the example disclosures are synthetic. Use them to see how the data table and narrative might look, then replace everything with your own company data and evidence.
Where can I find real company report examples for G1-6 business conduct?+−
The page has a 'From company reports' table that links to real published reports at the pages where the topic is disclosed. Use it to see how others present the topic, but do not treat it as a formal mapping or a required format.
What does the G1-6 page give me to make the disclosure assurance-ready?+−
It gives you five assurance claims to verify, a five-item evidence pack, and a workbook to organise the preparation. Together these are meant to help you check the claim, identify the risk, and keep the evidence in one place.
How do I turn the G1-6 data into a draft disclosure quickly?+−
Use the draft-output section: it includes visualisation ideas, narrative starters, and a content-index line. That lets you move from the four datapoints to a first draft without having to design the structure yourself.
More questions this page can help with
G1-6 standard payment period: what should I collect and who usually owns it?G1-6 small supplier terms: how do I document them for the workbook?G1-6 invoices paid on time: what evidence would an assurance reviewer expect?G1-6 late payment cases: how do I explain them in a draft narrative?What are the five assurance claims on the G1-6 page?What are the five items in the G1-6 evidence pack?How do I avoid common reporting gaps in G1-6 business conduct disclosure?How do I use the printable G1-6 Library Card PDF?What does the G1-6 plain-language explainer cover?How do I use the synthetic data table in the G1-6 example disclosure?Where do I find the content-index line for a G1-6 draft?Can I use the company report links on the G1-6 page as evidence of compliance?
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