Three-quarters of the respondents say late payment by their customers is a problem, with 45 per cent calling it a threat to their business.

The survey supports the view that the credit crunch has exacerbated existing difficulties, according to Martin Williams, MD of credit risk specialist Graydon.

‘Delaying payment is the cheapest way of financing a business, by using your trade suppliers’ money,’ he argues. ‘The problem is that smaller businesses don’t have the financial muscle or the expertise to ensure they get paid on time.’

Williams adds that late payment is a cultural problem in the UK. ‘Other northern European countries, such as Denmark and the Scandinavian countries, don’t have this problem because companies slap interest onto late payments,’ he explains.

‘Although the legislation exists to do that in this country, companies won’t use it because they are scared of losing their clients.’

GrowthBusiness polled 103 small and medium-sized enterprises from 7 May to 19 June.