A PLAN to reward firms which pay their suppliers on time follows a North East survey showing a third of bills are not paid on time.

And a quarter of companies said large businesses are more likely to put off paying up, in the report by the North East Chamber of Commerce.

The NECC found that 93% of firms complained of being paid late and they said that 30% of bills came after the due date.

Director of policy Ross Smith said: “While there are things that the Government can do to help alleviate the cash-flow difficulties that are both a cause and effect of late payment, a major effort needs to come from businesses themselves.

“Late payment leads to delays along the supply chain and exacerbates difficulties businesses have in accessing credit facilities like overdrafts.”

Survey respondents also reported that the private-sector performs worse than public bodies, with late payment in nearly 60% of cases, compared to around 27% in the public sector.

“While the amount of late payment in the public sector is unacceptable, especially with the Government’s commitment to pay all undisputed invoices in 10 days, it is surprising to see such a high share of businesses failing to honour payment terms,” added Ross.

The NECC is using the results of the survey to introduce a kitemark scheme to promote prompt payments and promote the adoption of the Department for Business, Innovation and Skills’ Prompt Payment Code.

The kitemark could be applied to prompt paying firms and would have value, be regularly assessed, backed by a rigorous complaints process and rescinded if it is judged the business has forfeited the right to use it.

NECC also hope the measure will help banks offer more competitive overdraft terms to firms who could show they are due payment from a company that holds this kitemark.