The late payment tsar will provide advice to suffering contractors, investigate complaints and have the power to name and shame offenders.
All firms are being invited to respond to the plan, which has gone out to consultation, before being passed as part of the Government’s Enterprise Bill.
The move delivers on the Government’s pledge for a small business conciliation service in an attempt to ring the changes on how small businesses resolve disputes with larger companies.
The tsar would help small businesses handle disputes over late payment and other supply chain practices that hit them especially hard.
Small Business Minister Anna Soubry said: “The small business commissioner will tackle the imbalance of bargaining power between small suppliers and large customers, and encourage them to get round the table and sort out disputes at a fraction of the cost of going to court.
“It will also provide advice, investigate complaints and see where further action is needed to clamp down on unfair practices.”
It will be one of several measures to tackle late payment including a reporting requirement for the UK’s largest companies to report on their payment policies and practices.
The small business commissioner will be able to use this data to name and shame those behaving badly and celebrate those leading the way by paying promptly.
Firms have four weeks to respond to the consultation.