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More companies are being urged to sign up to the government’s Prompt Payment Code.

The code is a written agreement launched last year for organisations to pay suppliers within the time stipulated within their contracts, but so far only 350 companies have committed to it.

Rosie Winterton, minister for regional economic development says: ‘Prompt payment remains the biggest financial challenge faced by firms. In many cases late payment is the difference between life and death for a business. I want to see more companies acting responsibly and paying their invoices promptly and without changing their agreed contractual terms.’

Ken Fisher, managing director of printing company Seevent, has signed up to the code. He says: ‘The payment of invoices on time is a major part of the contract between supplier and customer. The customer rightly complains if his goods are late in arriving and therefore should honour his part of the contract by paying on time.’

Money owed to small businesses increased by 40 per cent from £18.6 billion in 2007 to £25.9 billion in 2008, according to payment processing body Bacs.

Research from Barclays Bank reveals that more than 750 companies in the South East failed in 2008 because of late payments. The region’s companies will pay an estimated £33 million in unnecessary interest charges because of overdue payments this year, the research also claims.

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