More than 60% of entrepreneurs are struggling to maintain cashflow levels due to delays or defaults on the payment of creditors' bills, according to research by Tenon Recovery.

35% of the businesses surveyed estimated that late payments cost them in excess of £10,000 a year both in terms of bank charges and the administrative costs of chasing payments, even before the additional practical difficulties of day-to-day cashflow control are taken into account.

The average amount owed in late payments rose by a third in 2008, bringing the average amount owed by UK companies to around £40,000.

"Managing your cashflow is particularly vital in the current climate and issues relating to late payments form a huge part of this - many businesses go under simply because they run out of cash," said Carl Jackson, National Head of Tenon Recovery.

"Now, more than ever, businesses must adopt a responsible attitude towards late payments to avoid the domino effect of business collapses that l ate payments can cause. This means not only making payments on time to avoid causing problems, but having clear payment terms, credit control procedures and chasing slow-paying customers."

Initiatives that business owners can implement to address this issue:

1. Agree realistic payment terms upfront: Standard credit terms should be defined by how quickly you have to pay for materials and provide services; payment terms should be part of standard terms and conditions, contracts and every invoice.

2. Make it easy to be paid: Those with difficult payment processes are more likely to be affected; ensure clarity as to whom payments should be made to, how they should be made and provide bank details to accept BACS payments.

3. Credit check new customers: Background checks on potential new customers will help with your planning and decision-making with regard to the provision of any services. Credit reference agencies offer a valuable source of information, while you can also consider insuring trade debts.

4. Have a clear procedure for credit control: Ensure communication lines are kept open and a clear procedure for credit control is maintained - polite but insistent reminder letter should be sent on a regular and consistent basis.

5. Don't be afraid to take action: Late payment is a significant threat to your business and should be reacted to as such - chasing late payments is vital to survival in the current climate. It is also important to know who to chase for late payments and leave a trail by using email and faxes in case you have to take collective action.

For more information visit www.tenondebtsolutions.co.uk