SMALL businesses are struggling to cope as large corporate firms delay payments in an attempt to survive the credit crunch.

A survey carried out by the Forum of Private Business (FPB) has revealed that 88 per cent of respondents say that larger business customers are not paying them within contractually-agreed periods.

As the credit crunch shows no signs of abating, 72 per cent believe this is having a serious or very serious impact on their businesses.

Thirty-two per cent are owed between £1,000 and £5,000, which they say is having an impact on their cash-flow, and 56 per cent state that late payment has become worse over the past year.

"Late payment is on the rise, according to our research, with more than half of respondents saying it has become more of a problem over the last 12 months," said the FPB's finance and administration director, Nick Palin.

"The government should be doing more, both by paying on time itself and by implementing measures to tackle the problem without increasing the burden of legislation faced by small firms."

The FPB is working with the government to find non-legislative solutions to payment problems.

Small firms already have a statutory right to interest (SRI) under the Late Payment of Commercial Debts (Interest) Act 1998.

This allows them to charge interest on the debt they are owed, but relatively few take advantage of it.