Steve Mepham, a partner at National Print Database, said penalties of up to 100 on debtors were positive and could be used as useful tools by fee-chasing firms.

But you will never get away from the big-supplier little-company ethos where the former threatens to take away trade if these charges are dumped on it, he said.

Small-business minister Nigel Griffiths said late payers cost little firms nearly 7bn and forced 10,000 firms to fail every year. From August firms will be able to add 100 on overdue bills of 10,000 or more. Anything between this and 1,000 will attract a 70 bill. Those owing under 1,000 will be hit with a 40 late-payment charge.

Mepham was unhappy about the banding of charges, and said they were too spread out and arbitrary. He felt that a percentage of the bill might have been more appropriate. The new laws were the result of a European directive and aim to simplify the calculation of interest for late payment. The rate will be fixed for a period of six months, as opposed to the current monthly payment basis.

Story by Jez Abbott