An investigation will be launched to stop wealthier companies making late payments to smaller firms.
Mr Shapps said: “The UK’s 5.5 million small businesses are an integral part not just of our economy, but of our communities too, and this government is firmly on their side.
“That many small firms are routinely paid late is intolerable and presents a real barrier to productivity, the creation of high-skilled jobs and ultimately economic growth.”
The government already has a Small Business Commissioner team in place, investigating larger firms such as pharmacy giant GlaxoSmithKline, which has come under their scrutiny.
“This review will allow us to build on the success we have had so far in curbing late payment, unshackling small businesses from this exploitative practice and creating a system that is fit for the future,” added Mr Shapps.
Last year, the commissioner’s Prompt Payment Code saw rules tightened to require large firms to pay 95 per cent of smaller suppliers within 30 days, down from 60 days previously.
However, it is not a legal requirement for firms to sign up for the code.
Over the past two years, the government has led consultations into its late payment policies and the role of the commissioner.
On Small Business Saturday – a campaign that supports small businesses nationwide – Mr Shapps announced a new statutory review of the commissioner’s role, which he said will “help to ensure that the UK has the right arrangements in place to best support small businesses.”
The government said that small firms, which typically operate with low cash reserves, have over £23.4 billion currently owed in outstanding invoices in the UK.
The review will consider the progress made in a specific sector in combatting late payments and also include an in-depth examination of current payment reporting restrictions and the Prompt Payment Code.
Small businesses make up to 99.2 per cent of the total business population in the UK. They must have 0 to 49 employees to be considered small.