The PPC, administered by the Chartered Institute of Credit Management (CICM) for the Department for Business, Innovation & Skills (BIS), is a voluntary Code which sets out fair and agreed practices for businesses to follow when dealing with, and paying, their suppliers.

So far, more than 1,700 businesses and public authorities have committed to the Code’s principles, which include paying suppliers within an agreed timeframe and communicating with them effectively.

The 30-day payment timeframe, announced by business minister Matthew Hancock, will be rigorously enforced by the new Code Compliance Board, which will include people from business representative bodies who will investigate supplier complaints against signatories to the Code.

The board will be able to remove signatories to the Code who are found to be in breach of its principles and standards.

According to Hancock, ‘big companies should lead by example and pay small suppliers within 30 days’.

Businesses will be actively encouraged to start complying with the strengthened PPC, which complements the tougher reporting laws in the Small Business, Enterprise and Employment Bill.

These new laws will force the UK’s largest companies to publish their payment terms, increasing transparency.

The Code Compliance Board will be able to use the information published under the new laws to review the status of signatories to the Code and challenge those that either do not pay their suppliers promptly or insist on excessively long standard terms.

Miles Gabriel, spokesperson for the Prompt Payment Advisory board said: ‘Critically, the Code aims to move the UK to a 30-day payment environment.

‘Whilst it remains voluntary, it gives businesses the opportunity to advertise concern for their suppliers’ welfare and distinguish themselves from their competitors.

‘This creates a commercial advantage for businesses that improve their payment terms, over those that are benefiting from imposing unreasonably long terms at the expense of their suppliers.’