Payments owed to Britain’s small and medium-sized firms rose by £2.6bn last year to a staggering £18.6bn.

The latest research from BACS payment services reveals that the average small and medium-sized firm is owed £30,000 at any one time.

Michael Chambers, managing director of BACs, said: "These firms need to be much smarter about tackling late payments. They should use a range of solutions, including automated payments, to stamp out the problem once and for all."

In a recent survey carried out by the FPB, almost three quarters of respondents said that late payment severely affects cash flow and poses a ‘considerable threat' to the viability of their businesses. Delays caused by big business were deemed a particular problem for smaller firms.

"Late payment continually features in the commentary that we receive from members," said the FPB's Research Manager, Rebecca Leavers. "It is important that small firms are released from this stranglehold in order for them to be able to compete more effectively with bigger businesses."