FIRMS are being urged to change the culture of late payment which runs through British business.

New legislation came into force this month which is designed to help speed up payment terms.

Stephen Dexter, managing partner at the Oxford office of business advisers Grant Thornton, called on business leaders to create 'a brand new payment culture where suppliers are paid on time and in full'.

He said: "Small-to-medium sized enterprises are usually at a disadvantage when it come to the collection of debts. "Most do not have professional credit controllers and in the past they have lacked the power to challenge the larger organisations over payment of invoices.

"I want to see a major cultural change which will see businesses paid on time, without any need for chasing overdue debts."

Under the first stage of the Late Payment of Commercial Debts (Interest) Act, which came into force this month, small businesses - those with 50 or less employees - will be able to claim interest from large businesses - those employing more than 50 employees - and public sector bodies if they do not pay up on time.

But Mr Dexter said, it was, in reality, unlikely to do much to help small businesses speed up payment terms.

"Given the current economic climate, it seems likely that many small businesses will be reluctant to enforce the legislation, because they feel it could jeopardise existing business

relationships," he said.

"I would therefore call on larger firms to set an example and start the cultural change."

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