More companies are settling bills later than the agreed date in a move that could push smaller businesses to the point of bankruptcy.

According to credit-rating agency Experian, small firms could have to wait as long as five months after supplying goods or services to receive payment, with the average business now paying almost four weeks later than the date agreed.

The figures revealed that the average length of time taken to pay after the agreed terms stood at 16 days in July 2007. But by the end of July 2008 this had risen to 25 days as some companies use extended payment terms as a means of short-term funding.

"Businesses are not only taking longer to settle bills after agreed terms, but they are also extending those terms so that where they may have previously paid 30 days from invoice, they are now pushing this out to 60 or even 90 days," said Tony Pullen, managing director of Experian's business information division.

"The problem for smaller suppliers is exacerbated because they are often under pressure to settle their own bills quickly to secure goods and supplies essential to their business."

The worst offenders were companies in the property and energy sectors, which took an extra 38 and 37 days respectively to pay up after the agreed date. Business services and transport were also poor payers, with an average of 29 days in both cases.

The food, drink and tobacco sector was another big-mover, up 10 days on last year's figure of 15.

Experian advises businesses to credit check every customer before agreeing to do business and remaining vigilant over late payment among customers.

Companies should also introduce measures to encourage businesses that simply have a history of late payment to pay earlier, such as moving them onto direct payment methods or offering a discount for prompt payment.