A new prompt payment initiative has been announced, which aims to prevent late payments to government suppliers and subcontractors.
The initiative, which will come into force from autumn 2019, means companies could be prevented from winning government contracts if they fail to pay their own suppliers on time.
The Government says this will help "level the playing field" for smaller firms bidding for public contracts.
Oliver Dowden, Cabinet Office Minister, said:
"Paying invoices promptly is vital in providing healthy cashflow, particularly for smaller businesses who are the backbone of the UK economy, to help them survive and thrive.
"From next year, if government contractors are late with supplier payments, they could stop winning public contracts altogether - until they clean up their act."
Martin McTague, policy and advocacy chairman for the Federation of Small Businesses, added:
"This measure will get the thumbs-up from the small business community. This sends a clear message from government that paying late is not okay.
"Cracking down on big businesses supplying to government, and not paying on time, is a win for small businesses, taxpayers, the wider economy and public services."
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