Barbara Roche pledges the government will observe the code of practice

Small Firms Minister Barbara Roche has now launched a "Better Payment Practice Code" to stop late paying customers from forcing small firms into failure.

The campaign ties in with the Late Payment of Commercial Debts Act, which comes into force on November 1.

Small Firms Minister Barbara Roche wants to change Britain's business culture

The new law gives small businesses the right to charge interest on late payments from large companies and public authorities.

However, some small firms may be reluctant to offend large customers by demanding interest payments from them. The Department of Trade and Industry hopes that the law will be a "catalyst for change," bringing about a new business culture.

One option to increase the pressure, which is said to be the DTI's favourite, is 'naming and shaming'. The ministry is looking at setting up a league table for government departments and agencies, ranking them according to their payment records.

The campaign to fight late payers is being run by the Better Payment Practice Group, set up by representatives from the public and private sector. Several large companies have already announced that they will follow the new code of practice, and Mrs Roche has promised that all government departments and agencies will be signing up too.