The Government has appointed a small business commissioner dedicated to supporting the country’s 5.7 million small businesses, and helping them to resolve disputes around payment practices.

According to the Government, a third of payments to small businesses across the UK are late and 20 per cent of all small businesses have run in to cash flow problems as a result of late payments.

It said that if small businesses were paid on time, it could boost the economy by an estimated £2.5bn annually.

As well as appointing Paul Uppal to the role of small business commissioner, the Government on Wednesday launched a complaint-handling website, providing guidance to companies on payment issues and how to take action if a payment is overdue.

“Over the last five years the amount owed to smaller businesses has more than halved from £30bn to £14bn,” said Margot James, small business minister. She added, however, that the appointment of a commissioner will empower small businesses to take action and clamp down even harder on the problem.

Mr Uppal said that his mission was to “help all small businesses nurture positive and lasting relationships with their customers that work in the best interests of both”.

Mike Cherry, chairman of the Federation of Small Businesses, welcomed the move.

“The UK is gripped by a poor payments crisis, over 30 per cent of payments to small businesses are late and the average value of each payment is £6,142. This not only impacts on the small business and the owner, it is damaging the wider economy,” he said.

“The small business commissioner is crucial to turning the tide on this late payments culture,” he added.

He said that the FSB would encourage small businesses to use the service.

“We hope then to see clear actions taken to tackle the worst examples of supply chain bullying. Success will be a UK economic culture where a business that does a job promptly, is paid promptly,” he said.