The proportion of smaller firms experiencing the adverse effects of late payments fell by 20% in the first six months of the year.

Research from Bacs, the payment service, suggested the improvement has come about through the efforts of individual businesses in chasing debt.

Mike Hutchinson, head of marketing at Bacs, said: "It's extremely heartening to see that there are now many companies making great strides to help themselves beat the late payments cycle by sharpening up their billing and credit control procedures."