Large companies that pay late will now be excluded from winning Government contracts, following new prompt payment rules that came into force on 1 September 2019.
The policy, which was first announced in November 2018, applies to contracts worth more than £5 million a year.
To be considered for these contracts, companies must show they pay at least 95% of their invoices within 60 days.
Simon Hart, Minister for Implementation, said:
"Developing a prompt payment culture is critical for all companies helping to deliver vital public services.
"And it's particularly important for small businesses who may not have the reserves of larger organisations.
"That's why we're making it clear to big businesses that they must get their payment records in order or face the very real risk of missing out on large government contracts in the future."
Mike Cherry, chairman of the Federation of Small Businesses, added:
"We welcome the new administration taking ownership of the late payment crisis with this crucial step, sending a message that late payments will not be tolerated within Government contracts."
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