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 EFRAG source.
Before you start
A quick mental checklist before you prepare this disclosure — tick each as you settle it.
Preparation
Key datapoints to prepare
＋ 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
1Set 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.
2Agree 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.
3Pull together the source records: gather contract terms, invoice and payment logs, ageing reports, and any case-tracking records needed to support the four datapoints.
4Calculate 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.
5Explain 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.
6Check 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.
Industry examples
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
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Assurance readiness
For each claim, check the evidence
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 owner
Chasing 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 terms
Asking 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 boundary
Pulling figures from every entity or region without first fixing the reporting perimeter can mix in payments that should sit outside the dataset.
Wrong period basis
Using invoice dates, approval dates, or a rolling window instead of one fixed reporting period can make the payment figures inconsistent.
Mixed counting method
Combining percentages, counts, and days in one extract without a single method can produce numbers that do not reconcile to the source records.
Source labels lost
Copying 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 together
Lumping ordinary suppliers and smaller suppliers into one pool can hide the separate treatment needed for the SME-specific terms field.
No evidence trail
Saving 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 disposals
Use 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-scope
State 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 consistently
If 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 payments
Explain 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 records
If 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 figures
State 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 information
Where 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 simplified
If 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 (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.
How companies report G1-6 in practice
Real reports where this topic is disclosed. These are report practice, 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
Related framework references
How this disclosure maps across the major reporting frameworks.
Primary
Related & explore
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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