Almost two-thirds of small businesses have been hit by late or frozen payments during the Covid-19 pandemic, according to a report by the Federation of Small Businesses.
The FSB said its survey of more than 4,000 buinesses showed most small firms have been affected, deepening the already crippling late payments crisis.
Firms dealing with the public sector fare no better than those selling to other businesses, said the report.
The federation called for a "long-awaited" review of the Prompt Payment Code to be launched, repeat offenders fined and prompt payment to be made a precondition of state bailouts.
FSB chairman Mike Cherry said: "Before the Covid-19 outbreak struck, many small firms were already under immense financial pressure because of late payments.
"With cashflow drying up as the lockdown took hold, this situation has worsened. Sadly, some unscrupulous corporations are trying to inoculate themselves from the impacts of Covid-19 by withholding payments, or even freezing them, at the expense of small businesses.
"Our endemic culture of treating small businesses as free credit lines against their will must be brought to an end.
"Worryingly, this behaviour isn't just confined to the private sector. Late payment is equally prevalent within government supply chains.
"If the small firms that make up 99% of our business community are to play the fundamental role we need them to in ending this recession, this behaviour must stop. The Government promised to act a year ago. Time is running out - we need to see delivery."
A spokesman for the Department for Business, Energy and Industrial Strategy (BEIS) said: "Late payment can mean the difference between survival and bankruptcy for many small businesses. We expect big companies to stand by their smaller partners and pay them on time.
"We are working to tackle the culture of late payments to protect jobs and livelihoods, including by strengthening the Prompt Payment Code and reviewing the powers of the Small Business Commissioner."
