One of the UK’s biggest accounting trade bodies has recommended the introduction of fines to tackle poor payment practices.
The Association of Accounting Technicians (AAT) said the Prompt Payment Code should be made compulsory for companies with more than 250 staff.
It also proposed that maximum payment terms should be halved from 60 to 30 days, and “a clear, simple financial penalty regime” should be introduced for persistent late payers.
The trade body said the penalty regime should be introduced and enforced by the government’s small business commissioner.
SNP MP for Kilmarnock and Loudoun Alan Brown was one of several MPs from across the political divide to come out in support of the recommendations.
Mr Brown said: “I’m fully supportive of AAT’s calls to make the Prompt Payment Code compulsory for larger companies, especially construction companies.
“Too many of these big organisations use the withholding of payments to SMEs to bolster their cashflow, as was the case with Carillion.”
Conservative MP for Altrincham and Sale West and chair of the 1922 Committee Sir Graham Brady added: “The reforms suggested by AAT appear to be a good solution to this longstanding problem.
“Prompt payment is essential for most businesses but particularly SMEs who often suffer real problems when not paid in a reasonable timeframe.”
Labour MP for Bury North James Frith, Green Party MP for Brighton Caroline Lucas and Lib Dem business spokesman Lord Fox have all come out in support of the recommendations.
AAT head of public affairs and public policy Phil Hall said: “Years of voluntary initiatives and half-baked measures have not delivered what’s needed.”
He added: “It’s time for government to take action.”
The Aldous Bill, which seeks to make it unlawful for clients and contractors to hold retention monies directly, is due to have its second reading on 23 November.
The industry is currently divided as to whether or not to back the bill, with some bodies arguing that efforts should be directed towards completely abolishing retentions instead.