Ministers have launched a voluntary accreditation system in a bid to slash the time small businesses wait for invoices to be settled.
The government said its Fair Payment Code would help companies identify reliable clients.
It introduces a ratings system, with those firms paying at least 19 in 20 invoices within 30 days receiving a gold award.
Companies settling 95 per cent of bills within 60 days, including 95 per cent of those due to small businesses within 30 days, qualify for silver.
And bronze status will be granted to clients paying at least 19 in 20 invoices within 60 days.
Every business granted an award through the scheme will have to agree to be “clear, fair and collaborative” with its suppliers.
The launch of the code comes after the government promised to “crack down” on late payment, with measures including a consultation over “tough new laws which will hold larger firms to account”.
Small business commissioner Liz Barclay said: “The Fair Payment Code is our response to all those suppliers who begged for a more aspirational, robust and ambitious approach to changing the business-to-business payment culture in the UK. It also gives a clear signal of intent on the part of government.
“We want suppliers paid within 30 days, with payment beyond the due date a rare event. We want longer contractual payment terms to be recognised as potentially detrimental to vital supply chains. We want businesses of all sizes to commit to fair and quick payments and to avoid harmful disputes. This new code will drive a better payments culture and benefit everyone.”
Awards through the Fair Payment Code will last for two years, after which every business will need to reapply.
The government pledged to put “a robust complaint system in place” to back up the system.
