After several construction firms were suspended from the Prompt Payment Code after failing to pay their suppliers on time, the scheme has been cut from 60 days to 30 days.
The Prompt Payment Code was introduced to relieve the pressure on smaller businesses within the supply chain, by pushing bigger businesses to pay on time.
More than 3,000 companies have signed the code, but slow payment practices are still all too common.
Small Business Minister Paul Scully said: “By signing up to the Prompt Payment Code and sticking to its rules, large firms can help Britain to build back better, protecting the jobs, innovation and growth which small businesses drive right across the UK.”
The code requires a company’s CEO or Finance Director to personally sign the code, taking responsibility for payment practices.
The new terms also state that suppliers can charge interest on late invoices, and by signing the Code contractors acknowledge this.