SMALL Business and Economic Transformation Minister Blair McDougall has hailed sweeping plans to clamp down on late payments as “game changing” during a visit to two South East Cornwall firms, warning that poor payment practices are strangling small businesses and holding back growth.

The minister toured operations near Liskeard and Kelly Bray alongside South East Cornwall MP Anna Gelderd, promoting proposals designed to ease mounting “pressure with cashflow” faced by firms across the region.

Under the plans, the government would introduce a mandatory 60-day cap on payment terms, enforce interest charges of eight per cent above the Bank of England base rate on overdue invoices, and issue fines to repeat offenders who fail to pay suppliers on time.

Officials say they are “determined to tackle the scourge of late payments,” which costs the UK economy £11-billion annually and contributes to the closure of 38 businesses every day.

Speaking during the visit, Mr McDougall said the reforms would rebalance power between large corporations and smaller suppliers.

“These are genuinely game changing measures that will ensure no business, no employer, no family has to endure the immense strain of being left strapped for cash they have already earned,” he said.

“Too many loopholes have allowed companies to negotiate away their right to be paid quickly. That ends now.”

He added that late payments amounted to “big companies using small companies as a free line of credit”, calling the practice “exploitative” and “unfair”.

At Cornish Tea & Coffee Company, based on the outskirts of Liskeard, managing director Duncan Bond outlined the scale of the problem, revealing the company is currently owed around £300,000.

“If there’s an incentive for people to pay quicker it helps cashflow enormously,” he said. “Last year we wrote off around £15,000 to £20,000 and those were just straightforward bankruptcies, and you can’t stop that.”

Mr Bond described the company’s efforts to recover debts with a mix of humour and frustration.

“Our account managers are the good cops and we have the bad cop upstairs – she’s called Karen,” he said. “Customers are more scared of a call from our Karen than anything the government could do.”

Mr McDougall, who previously ran a small business, said the issue was deeply personal.

“I remember sitting refreshing my online banking, waiting to see if an invoice had been paid,” he said. “I remember wondering one Christmas if I could afford it because tens of thousands of pounds hadn’t come in.”

He warned that across the economy, businesses spend an estimated 133 million hours chasing unpaid invoices – time that could be used to innovate, hire staff or expand.

Ms Gelderd said the crackdown was long overdue, adding: “Late payments are the last thing any business needs and can push them into the red through no fault of their own.

“I’ll continue working with local companies to ensure policies support our Cornish entrepreneurs and keep our economy strong year-round.”

A government spokesperson confirmed the legislation would be brought before Parliament “when time allows”.