According to BIS, 85% of small businesses have experienced late payment in the past two years.

The proposals, published last Friday (30 May), include looking at ways to make the public sector a “beacon of best practice”, improving transparency in payment terms and strengthening the Prompt Payment Code.

Business secretary Vince Cable said the government would make it compulsory for large companies to publish information about their payment terms in order to improve transparency and highlight good and bad payment practices, forcing those who are not playing fair to change their behaviour.

“I believe that this will have a positive effect because there will be moral standards that have to be set by some of the larger companies that do try to set examples,” said Ian Carrotte, chief executive of print credit checking firm ICSM.

On the Prompt Payment Code, BIS said it would look at further action that would increase awareness of the code and encourage more organisations to sign up.

Signatories to the voluntary Code commit to paying their suppliers within clearly defined terms. This in turn gives suppliers more confidence in dealing with customers that support this good practice.

Simon Todd, managing director at SP Design, a Potters Bar-based print business with a turnover of £250,000, said that his firm has felt the effects of late payment.

“It has a major impact as we need the money to come in to keep the machines running. We’ve been going five years and we’ve had a couple of clients [in the past] that were seriously slow on paying and that was a problem.

"If everybody paid in 30 days life would be simple. 60 days is acceptable, 90 is pushing it and 120 is disgusting.”

The government has not proposed to introduce a statutory maximum payment term for paying suppliers in the report, a move that has been met with mixed reactions.

“The majority of printers are victims to [late payments]. I think they are partly to blame themselves in as far as they are afraid to push for payment,” said Carrotte.

“I think that a maximum payment term should have been introduced. 40 to 45 days would be reasonable and sensible.”

But chief executive of the BPIF Kathy Woodward said: “If you create maximum payment terms you would actually be interfering in free trade really.

“I think the way to resolve the issue is for firms to make getting payment a priority. Everybody prioritises getting the sale in but not everybody has the same focus on some of the administrative backroom activities.”