FIRMS have been urged to tighten up on late-paying customers.

HSBC Commercial Banking made the plea after a poll showed that 40% of small and medium-sized firms would put action to tackle late payments at the top of Chancellor Alistair Darling’s Budget measures.

Research by payment service Bacs claimed that the amount of money owed to such firms rose by 40% last year to £26bn – with some firms forced to wait up to six weeks after the agreed settlement date to get paid.

But HSBC said just one in 10 firms used invoice finance to free up their cashflow – despite 64% of them rating management of cashflow as the biggest challenge for growth.