Serial late payers could also be forced to settle their bills under “binding payment plans.”
Small Business Minsiter Kelly Tolhurst unveiled a “robust” package of measures to help smaller companies.
But plans to fine persistent offenders are only being put out to consultation at the moment.
The Small Business Commissioner will oversee a strengthening of the late payment regime and will also take charge of the Prompt Payment Code.
Construction leaders remained sceptical about the government’s latest tough talk.
Nick Sangwin, National Federation of Builders national chair, said: “These proposals for consultation will further expose the failure of the Government to tackle late payment.
“It’s time to do the right thing and kill off late payment, rather than kicking the can down the road once again.
“Today’s announcement does not help small construction businesses who are about to go under because they are owed money. Nothing has changed for SMEs.”