The sum of money now owed to British and small and medium-sized enterprises (SMEs) stands at £25.9bn, according to Bacs Payment Schemes (Bacs).

Overdue payments rose by 40% with the Midlands hardest hit, and the average SME claiming overdue invoices amounting to £69,000.  

The number of SMEs owed money has jumped to 60% from 51% in 2007, with 24% claiming that late payment was down to cash flow problems.

Michael Chambers, managing director of Bacs, said: “This research demonstrates the pain being felt by many small and medium sized British businesses during these challenging economic times, and late payments could well be a major factor in the success or failure of these companies in the year ahead. SMEs are currently disappearing at a rate of 86 every day.”