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Small businesses serving the government are waiting longer to get paid, despite a pledge by business secretary Lord Mandelson to settle invoices within ten days.

Some 63 per cent of SMEs supplying government departments say they have been waiting more than 30 days for payments, compared to 60 per cent surveyed in March last year, according to credit reference agency Graydon UK.

Martin Williams, managing director at Graydon, says: ‘It’s difficult to gauge how damaging the impact of this failure has been in terms of exacerbating the cash flow problems faced by small firms amidst the downturn. What’s certain, however, is that the public sector needs to set a better example when it comes to paying for goods and services on time.’

Of the 229 small businesses surveyed, 98 per cent report that they are still not being paid within the ten-day timeframe pledged by Lord Mandelson in October 2008. This compares with a figure of 99 per cent in March 2009.

Businesses waited an average of 20.88 days beyond their agreed terms for work carried out in the private sector during December, according to the credit advisory firm Experian.