Late payment leaves 28% of affected small firms struggling to pay their own bills

The survey heard from more than 10,000 small businesses in England and Wales. The Small Business Commissioner backed its findings the next day.

According to the Legal Services Board, 36% of small businesses had at least one legal issue in the previous year. Those firms faced an average of 2.8 issues each.

Nearly one in five said legal issues had stopped or delayed investment in growth. Four in ten issues cost more than £5,000. One in ten cost more than £15,000.

Late payments were among the most common problems in the survey. They were also among the most damaging.

According to the survey, 35% of businesses affected by late payment spent significant time and resources chasing it. And 28% had difficulty paying their own bills as a result.

That is the knock-on effect. When a customer pays you late, you can end up paying your own suppliers late.

Emma Jones, the Small Business Commissioner, said the results show "the importance of tackling poor payment practices". She pointed to the Commercial Payments Bill, which the Government is taking through Parliament.

Chasing comes first, and the law is on your side. On a late business invoice you can usually claim statutory interest of 8% plus the Bank of England base rate. Bank Rate is currently 4%.

You can also add a fixed sum for the cost of recovering the debt. It is £40 on a debt under £1,000, £70 on £1,000 to £9,999.99, and £100 on £10,000 or more. The Small Business Commissioner's website has a free interest calculator and help with unpaid invoices.

Chasing can take weeks, though, and your own bills will not wait. If one slow payer is the problem, invoice finance or a short loan can cover the gap. Our guide to invoice finance or a business loan for slow payers compares the two.

If late payment has made you pause a plan to grow, keep that decision separate. Business growth finance sized to the plan may suit it better than stretching the cash you need for day-to-day bills.