In his Spring Statement, Chancellor Philip Hammond announced a consultation on the "continuing scourge" of late payments, which is estimated to affect thousands of businesses each year and cost the economy billions of pounds.
Brian Berry Chief Executive of the FMB, said the Chancellor's announcement "should mark a turning point" on the issue.
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"We should use this opportunity to bring about a spring clean of payment practices which negatively impact on small business," he said.
"Construction giant Carillion’s collapse at the start of the year brought to light once again the need to eliminate poor payment practises that plague the construction sector particularly."
Continuing, Mr Berry said one London-based small building firm was once paid more than 270 days late by a construction giant.
"Now is the time to move away from these unsustainable business models which threaten the existence of many firms and their supply chains," he said.
"This announcement today should be followed by a fundamental rethink ending in the permanent abolition of late payment terms and the exploitative use of retention payments."
(LM)
