Frank Field, chair of the Work and Pensions Committee, said: “Government urgently needs to come to Parliament with radical reforms to our creaking system of corporate accountability.”

A Cabinet Office spokeswoman said it had recently announced measures to support government suppliers, including strengthening its commitment to “protecting staff, businesses and small suppliers from irresponsible directors”.

It said it would “respond fully” to the committees’ report in due course.

Carillion has been on the tip of everyone’s tongue since its collapse. It raised awareness of the severity of late payment and the vulnerability of the supply chain. When Carillion fell, it left all its suppliers millions of pounds in debt, as a consequence of repeatedly accepting services it knew it couldn’t afford to pay for.

While we would all prefer cash, achieving sales through credit can sometimes be the only option available. When competitors are offering customers the financial flexibility of business credit, businesses can feel pressured to do the same. However, the subsequent upturn in sales will swiftly be contradicted by the damning negative impact on cash flow. Supplying on credit demands a loyalty and assumed trust in the customer, so a scrutinising eye over financials is essential.

Supplying on credit can be positive, as long as the correct checks and precautions are conducted. At the Credit Protection Association, our debt recovery services free up cash flow and leave our members in a stronger financial position to return to trade. In this turbulent climate of late payers and bad payment practices, we encourage our members to utilise our credit checks and status reports to keep a keen eye on every customer and ascertain that there is nothing that could smear reputation and brand.

We fight to the tooth for our members, particularly those who have suffered from late payers such as Carillion. We’ve recently created a new department within our company dedicated to getting our members rightly compensated in accordance with the Late Payment of Commercial Debts (Interest) Act 1998, unlocking hidden cash and potential in our members and their prospects.

The moral of the story is small suppliers should be assertive in handling late payers, and not worry about damaging the business relationship. At the Credit Protection Association, we are dedicated to keeping this important relationship intact and our communication with the debtor is always courteous but always firm.

 The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!