Small UK firms are still being hampered by late payments, warns the Federation of Small Businesses (FSB).

The business group found that the proportion of small firms whose late payments worsened in the final quarter of 2023 rose from over one in four to over a third.

The FSB said that small businesses have ‘dampened’ growth expectations for 2024.

It also found that the percentage of firms seeking to increase their capital investment stayed flat between the third quarter of 2023 and the fourth quarter.

Martin McTague, National Chair of the FSB, said: ‘Late payment is a scourge, and one that shouldn’t exist – there’s no excuse, with modern business banking methods, for large companies to hold onto money due to small suppliers.

‘Overdue invoices cause uncountable amounts of stress and harm to small business owners, leading to sleepless nights and lost productivity. Large companies should make their payment performance a board-level issue, and include it in annual reports, to improve accountability and transparency.

‘Small firms contain the dynamism and the ambition to grow that will get the economy up and running, if they are given the right conditions to flourish, invest, and make their mark.’