Almost a quarter of respondents to the quarterly Economic Downturn Panel survey said that late payment was their "key issue" over and above lack of sales (20%) and complying with health and safety regulations (11%).

FPB chief executive Phil Orford said that small firms' cashflow was being "decimated" by credit restrictions and declining trade. "Poor payment, which has always been a problem, is now threatening the very survival of many businesses," he added.

The challenge of late payment facing small businesses appears to be worsening, with 42% of respondents reporting a deterioration in prompt payment from customers, compared to just 3% who said the problem was easing.

Measures to prevent late payment have been launched by various bodies. The government has launched the Prompt Payment Code, where suppliers sign up to commit to prompt payment, and the FPB has set up the Late Payment Hall of Shame.

However, the Prompt Payment Code has attracted only 500 signatories since its launch in December last year and the Hall of Shame has "shamed" only 13 companies since the beginning of 2008. 

Andrew Brown, corporate affairs director at the BPIF, claimed there is a danger that companies naming and shaming their clients could be identified, which "would do them no good".

He added that there was scope for improving legislation on late payment, but said that the Prompt Payment Code was having some impact, as a number of companies with considerable print spend, such as Asda, had signed up.

BAPC chairman Sidney Bobb said that "the powers that be" should take action to ensure that everyone in business has a payment policy and companies know when they are going to get paid.

The findings of the survey follow on from a warning by credit-checking agency ICSM that printers must overcome the "fear of upsetting customers" by chasing bad debts or they will face the consequences (PrintWeek, 18 September).

Read news editor William Mitting's blog: Toothless late payment code is failing SMEs