The charter commits firms to paying suppliers within 30 days from January 2018.

The document has been drawn-up by the Construction Leadership Council and sets out 11 “Fair Payment Commitments”.

These include reducing payment terms to 30 days from January 2018 with interim stages of 45 days from June 2015 and 60 days with immediate effect.

Other commitments include not withholding cash retentions, not delaying or withholding payment, and making payments electronically.

But at launch yesterday just nine of the firms on the 30-strong Construction Leadership Council were able to commit to the voluntary charter, which has improving improving payment practice within the private sector in its sights.

Peter Hansford, the Government’s Chief Construction Advisor, said: “This Charter signifies the Construction Leadership Council’s commitment to small and medium-sized business, and the important role they play in the construction industry.”

Anna Stewart, Chief Executive, Laing O’Rourke and Mike Putnam, Chief Executive, Skanska said: “The work undertaken on the Supply Chain Charter has been an important part of what the Construction Leadership Council hopes to achieve by 2025.

“By publishing the Charter, the Council is setting out a clear position, and is encouraging others to follow.

“No one section of industry and no one representative on the Council can, in isolation, achieve the transformation we’re after – it will require everyone working together, across industry and Government, including clients, contractors and the supply chain.”

Kevin Louch, President of the National Specialist Contractors Council said: “Many within the industry, and not just specialist contractors, want to see 30-day payment terms on all construction projects, but we recognise that it will take time for large businesses to adjust their business models over the next few years.

“Many clients already pay in 30 days and we would like them to make public their commitment to the new payment charter and give the industry the confidence to pass that payment through the supply chain to those delivering their projects on site.”

Finance firms are also hoping the charter will boost the flow of lending to construction companies.

Chirag Shah, Chief Executive of Nucleus Commercial Finance, said: “Construction has been ignored by many lenders for being too high risk.

“Whereas some specialist lenders like Nucleus have dedicated finance products for the construction industry, the majority have opted to target other sectors with less risk.

“By bringing greater certainty to payment terms, however, I believe that those lenders may now be tempted back, which is good news for the lending community, but even better news for construction firms who will now have greater access to funding and greater choice.”