Latest research from Bacs Payment Schemes Limited reveals that 76 per cent of UK businesses, including many from Gwent, are being forced to wait at least a month beyond their agreed contract terms before getting paid.

The knock-on effect of this is that business owners have to make tough decisions in order to make it through the month.

Some 20 per cent of directors, in companies which experience late payments, say they have taken a cut in salary in order to keep cash inside their businesses.

More than a quarter (26 per cent) are having to use their overdrafts to make ends meet and one in ten are experiencing one or more of the following challenges every month: difficulties in paying staff on time, factoring invoices and difficulties paying regular bills. Some 23 per cent claim the late payment situation is forcing them to pay their own suppliers late.

Phil Orford, chief executive of The Forum of Private Business, said: “Late payment remains a key issue for many of our members. These latest findings from Bacs also suggest it continues to seriously affect a small business’s ability to fund business growth.

“Being paid late or having to deal with longer payment times can severely hamper any business, large or small. Alarmingly, this culture of late payment has a ripple effect down the whole supply chain with many small firms admitting to paying their suppliers late due to business liquidity issues created by outstanding payments.”

Commercial legal specialists HardingEvans, which is based in Newport, is urging businesses in Wales to prepare themselves properly from the dangers of customers that don’t pay on time.

Nicola Moorcraft, of HardingEvans, said: "Recent industry research has revealed that almost a third of invoices issued by British companies were paid after their due date. That being said, more and more debtors are paying on time due to the correct application of 'Late Payment Legislation' and ultimately, the threat of a CCJ being registered against them.

"In commercial contracts, creditors have the right to charge late payment compensation and interest in accordance with Late Payment Legislation when debtor’s invoices become overdue. Depending on the amount of overdue invoices, this can, in some cases, double the amount owing to the creditor.

"This is not a position that any debtor would want to find themselves in, especially if the matter proceeds to court. Ultimately, this could then result in the debtor receiving a CCJ against them for a sum far greater than the original unpaid amount.

"Effective credit control can mitigate the potential for bad debts. By carrying out a credit management health check on new customers, companies can significantly strengthen their bargaining position. Effective credit control should actually start before an invoice is even issued so it is vital that companies have stringent policies in place from the very beginning. It is increasingly important to be proactive, and not just reactive.

"Utilising our debt recovery service is a cost effective solution to collecting unpaid debts as a simple extension of in house credit control departments at any time, but particularly at busy times. We pride ourselves on using a team of top legal cash collectors who will help your business with debt collection for a price that will suit you," she said.

The Bacs figures reveal that SMEs are owed £32.4bn – down from £39.4bn in January 2014. Corporates (companies employing 250 or more people) on the other hand are owed around £9.1bn, up from £6.7bn in January 2014.

While the overall figure has fallen, the data shows that 59 per cent of companies surveyed are impacted negatively by late payments. This is in line with January 2014 findings which showed the figure standing at 60 per cent.

These difficulties are made worse by the revelation that SMEs are facing additional costs of around £677 a month which are directly attributable to late payments – this equates to around £8.2bn a year. Of this, some 63 per cent is associated with administration time spent chasing late payments, or around £5.2 bn annually.

While almost 40 per cent of businesses are aware of government measures to help companies minimise their exposure to late payments, 72 per cent were unconvinced that these measures would speed up payments to them. And some 59 per cent claimed to be unaware of these measures.

Mike Hutchinson from Bacs, said: “The ongoing issue of late payments means that businesses across the UK are facing some tough choices about how to use the cash available to them. They are concentrating on keeping their own businesses afloat rather than paying suppliers, and so the vicious circle continues."