Small businesses are still being made to wait too long for bills to be settled by their larger customers.

In spite of legislation giving them the right to charge interest on overdue payments, few dare for fear of losing future orders.

The Sussex branch of the Association of Chartered Certified Accountants said small firms were afraid to charge interest in case it prompted reprisals from bigger customers.

It said 10,000 businesses failed last year because they did not use the legislation.

Business information group Experian said the introduction of the new law last year had not worked. Payment time had lengthened as firms used delaying tactics to improve their cash flow in deteriorating economic conditions.

The average payment time had risen by one day to 60.3 days since the new laws were introduced.

The Better Payment Practice Group said 86 per cent of larger companies were aware of the legislation but only 17 per cent said it had been used against them.

Experian managing director Steve Kilometer said small firms should not be afraid of using the law to get their customers to pay up.

He said: "Late payment can, and frequently does, lead to business failure and job losses. We expect the position to get worse as the economy gets tougher.

"The right to charge interest on late payments is really quite low on companies' priorities when faced with difficult trading conditions and falling profit margins.

"Their priorities are to maintain cash flow and protect the jobs of their employees. Payment times are even longer than when the legislation was introduced."

Worthing-based credit management consultant Derek Scott said the new laws had made no difference because small firms feared bullying and reprisals if they asserted their new rights against large customers.

He said: "Legislation has made no progress and is going nowhere."

Some of the biggest companies made use of delayed payments to improve their own balance sheets and small firms kept quiet if they wanted more business.

"There has been a lot of comment about how well Marconi was managed when it was called GEC.

"Everybody fails to mention the average payment period of invoices by GEC was between three and five months. It is no wonder it was cash rich.

"As for the new legislation on late payment, forget it. It does not work and never will. Commercial clout will always rule."