Almost three-quarters (73%) of small businesses have been paid late in the last 12 months, according to new research by the Federation of Small Businesses (FSB).

The survey showed that 43% of FSB members are currently waiting for payments of up to £4,999 and, in the past year, 56% have written-off invoices worth up to £9,999 because of non-payment.

Because small firms do not have the same cash-flow buffers as larger businesses, being paid late causes a vicious circle, said the FSB, with 38% of respondents who are paid late then paying their suppliers late.

The government’s commitment to pay all invoices to small firms within 10 days has improved payment times, it added, but the survey showed that 18% of respondents were still being paid late by the public sector. Over 50% of small business owners said they spend between one and six hours per week chasing late payments.

John Walker, national chairman of the Federation of Small Businesses, said: "In the current economic climate, every penny counts and, for small businesses, a late invoice can mean not being able to pay their staff. We need to see all businesses ensuring they make payments on time if the private sector is to get on with the job in hand of strengthening the recovery."