Last week Business Secretary Greg Clark announced a package of measures to safeguard small firms from late payments – a move which is welcomed by the Federation of Small Businesses.

We have long been campaigning for tough action to be taken against those companies that persistently and wilfully refuse fail to pay their bills on time, because late payment is one of the biggest challenges affecting small businesses.

In fact, our research shows that a third of payments to small businesses are late, with the average value of each late payment standing at more than £6,000.

Furthermore, because of late payments 37 per cent of small firms have run into cash flow difficulties, 30 per cent have been forced to use an overdraft and 20 per cent have been hit by a slowdown in profit growth.

It’s important to remember that this is money tied up in unpaid invoices. Money that could and should be being used to buy stock, new equipment, pay wages and train or take on additional staff, develop new and improved products and services and so on.

So, it is good to hear that central government intends to set an example by paying 90 per cent of undisputed invoices from small and medium-sized businesses within five days.

The Government has also listened FSB proposals to make company boards appoint Non-Executive Directors with responsibility for supply chain practice. Again they are looking to set the pace by ensuring that all government departments have such a post, which will be responsible for prompt payment, improving payment practices and exploring how better to use technology to make payment processes more efficient.

If this model is rolled out across UK businesses it could help to transform boardroom culture, where it has become acceptable and commonplace to pay suppliers late if it helps cash flow.

At the end of the day, embedding best payment practices in Government and big businesses is one of the best ways to help small businesses to survive and thrive.