The government says it is concerned that 85 per cent of small and medium-sized enterprises (SMEs) have experienced late payments over the last two years, and wants to aid the firms.
A consultation will be issued this year to look at making directors more responsible for payments, increasing transparency on which firms are good payers and which are not, and encouraging firms to charge interest on late payments.
“It’s not right that suppliers are not getting paid on time for the work they do and the services they provide and I know late payment can have devastating effects on our small and medium sized businesses,” said Prime Minister David Cameron.
Business groups welcomed the ideas in the consultation.
“Businesses already have routes for recourse if they are paid late, but the reality is that few choose to act on late payment for fear of fall out with their customers,” said Katya Hall from the CBI.
Meanwhile the National Insurance Contributions Bill is being introduced to parliament, which the government says should save small firms up to £2,000 a year in tax payments.