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The Small Business Commissioner has launched a new awards system to encourage better payment practices across business.

The new Fair Payment Code, which replaces the Prompt Payment Code, features a tiered system of Gold, Silver and Bronze awards.

Gold will be given to firms paying at least 95% of all invoices within 30 days; silver will be given to those paying at least 95% of all invoices within 60 days, including at least 95% of invoices to small businesses within 30 days; while bronze will go to those paying at least 95% of all invoices within 60 days.

Late payment has been a major complaint of the construction supply chain, particularly among smaller firms.

Before the July general election, the Chartered Institute of 好色先生TV cited late payment culture as one of the key challenges facing contractors and urged the next government to prioritise addressing the issue in its first 100 days.

After Labour came to power, the Department for Business and Trade promised to tackle the 鈥渟courge鈥� of late payments with 鈥渢ough new laws鈥�.

Late payments cost SMEs 拢22,000 a year and lead to 50,000 business closures annually, as well as 56 million hours of lost productivity across the economy, according to the government.

>> Read more: Shedding new light on late payment

>> Read more: New ruling says late payment may not be grounds for termination

Firms will be able to apply for the Fair Payment Code awards, which they will hold for two years before they need to reapply. The commissioner has said there will

Small business minister Gareth Thomas said: 鈥淟ate payments cost businesses tens of thousands of pounds and is one of the biggest reasons businesses collapse and today鈥檚 measures look to tackle the issue head on.

鈥淭his government鈥檚 primary ambition is clear: to go for growth. To do that, we must unleash the potential of our entrepreneurs.鈥�

Liz Barclay, small business commissioner, added: 鈥淲e want suppliers paid within 30 days with payment beyond the due date a rare event. We want longer contractual payment term 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.鈥�