The number of companies suffering late payment from customers has more than doubled in the last six months, according to data from the Baker Tilly Finance Director Survey published today.

This latest twice-yearly survey shows that 41 per cent of the 100 financial directors questioned have reported a problem with late payment, double the 19 per cent who reported this as an issue in the previous survey in March.

Mark Wilson, managing partner at Baker Tilly’s Watford office, said: “Increasingly, businesses are having to fund their working capital through stretching credit terms with their suppliers as they can’t rely on invoices being paid on time. This creates a chain reaction throughout the economy. However, the stark reality is that elastic can only be stretched so far before it snaps and we will see more companies go bust as pressure on working capital increases.”

The Baker Tilly survey also reveals that businesses face significant challenges before the economy recovers. Significantly, 54 per cent of respondents expect no improvement at all in trading conditions for their business over the next 12 months, whilst 28 per cent expect trading conditions to worsen throughout 2010.

The research also highlighted that 60 per cent of firms have made redundancies in the 12 months to September 2009 compared to 42 per cent in the 12 months to March. Furthermore, 57 per cent of finance directors are concerned about an increased risk of criminal fraud impacting their business as a direct result of the recession.

Llack of bank credit is no longer seen as the primary factor adversely affecting business performance. Lack of consumer confidence is seen as more significant (35 per cent v 29 per cent).

Wilson continued: “Reduced concern about the availability of bank credit could be interpreted as a positive sign of an easing of credit conditions. However, as evidenced by the pressure on supplier payments, I suspect it more reflects businesses simply getting used to tough conditions and moving on. Some entrepreneurs have given up on their bankers and are finding another way.”

Despite these major concerns however, the survey also revealed some optimism among the finance directors surveyed. Thirty three per cent expect an increase in like-for-like sales over the next six months (albeit against a poor comparative period), compared to only 20 per cent in the previous survey in March..