Cash flow issues caused as a result of late payments are the largest problems faced by small businesses, according to a survey carried out by the Forum of Private Business (FPB).

Almost a quarter of respondents to the survey selected late payment and, subsequently, poor cash flow as their ‘key issue'. The second largest concern was lack of sales with 20% of respondents selecting this, followed by 11% that chose complying with health and safety regulations.

42% of respondents reported deterioration in prompt payments from customers - typically bigger businesses - compared to just 3% who said there had been an improvement. A total of 56% said there has been no change from previous months.

"Small firms' cash flow is being decimated by credit restrictions and declining trade. Our research suggests that poor payment, which has always been a problem, is now threatening the very survival of many businesses," said Phil Orford, chief executive of the FPB.