British businesses have a £75bn burden of debt

This has not been seen in the past two economic cycles, and is £94bn higher than in the 2004 downturn when debtors owed corporate creditors £19bn.

“Trade credit is being used as a blunt instrument by many companies, with outdated practices poorly adapted to today’s new economic environment,” said John Keating, European managing director, at Taulia. “We believe this is a serious threat to the UK economy.”

The report, which studied 15m limited company reports that were filed between 1998 and 2012, showed that 80pc of everyday business-to-business transactions are on credit terms and without it UK commerce would grind to a halt.

“Big business may not be the villain of the piece with small firms taking ten days longer to pay,” said the report author, Professor Nick Wilson.

While there were examples of bad practice in supplier treatment, the research shows that large firms are the net providers of trade credit to small companies with SMEs receiving £50bn more than they advance in trade credit.

On average, minnow businesses also take around ten days longer to pay suppliers than their larger cohorts.

“Not only does it demonstrate the SME’s reliance on trade credit, but also damages their future ability to secure finance with the banks,” said Professor Wilson.

The report found that length of time it took companies to repay a loan was 58 days - if the total could be reduced to 30 that would release £199bn of working capital back into the UK economy.

“Many small firms do not have the knowledge, understanding, tools or credit management processes in place to understand how to optimise the use of their trade credit,” added Jon Keating, managing director at Taulia.

This research follows news last week that traditional lending to small businesses had fallen by 20pc over the last 12 months.

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