New proposals to give business groups further powers to challenge unfair payment terms and practices on behalf of their members were published for consultation this week.

Business Secretary Vince Cable said: “Large companies using their economic might to impose unreasonable terms on their suppliers causes real problems for small businesses.

“It is a significant issue and there is agreement that we need to keep the pressure up to bring about real change.

“This is about making the UK a fairer and more trusted place to do business.”

The Government said that it hoped the new powers would encourage trade contractor bodies in the first instance to challenge a firm’s payment terms and ask for them to be improved.

Under the Government’s plan payment terms would be classified as grossly unfair if they extended to more than 60-days.

Bodies representing subcontractors could pick and choose which firms to take action against and would have to fund it from their own reserves but would be entitled to costs if they won the case.

The Government consultation states  that “issuing an injunction against the business with grossly unfair terms, ordering them to end the practice, would send a message to others that such terms or practices will not be tolerated. ”

Courts would also be able to award damages to the injured party to compensate for any loss suffered.

Late payment consultation documents.