SMALL firms are running out of patience with late payers and are chasing overdue invoices more quickly. Businesses are now issuing late payers with a Letter Before Action (LBA) 33 days sooner than they were a year ago.

Commercial debt recovery law firm Lovetts Plc said the findings reflect the same behaviour that was last seen just before the banking crisis in 2008.

It said the moves suggest another dramatic tightening of cash flow and fuels speculation that a second banking crisis may be on the horizon.

Lovetts carries out quarterly analysis of the volume and value of LBAs issued and claims made on behalf of clients.

The letters are sent out in an attempt to secure payment or obtain a response from a customer before a business starts legal action to recover the debt.

Lovetts said during the second quarter of this year, it issued 9% more claims and their value rose by a quarter compared to the first three months of this year.

It said the figures suggest the caution exhibited post-recession when businesses were anxious not to upset valued customers by using legal action to recover overdue debts has now started to disappear. Lovetts chairman and managing director, Charles Wilson, said: “Q2 2011 has seen a marked change in behaviour by our clients.

“This period last year there was clearly a reluctance to put too much pressure on customers to pay up, to keep delicate relationships on an even keel as we came out of recession.

“However this tolerance appears to have run its course and now businesses are really putting the pressure on. No doubt the failure of several high street brands along with the debt problems in the Eurozone are making many businesses jittery and the time for leniency has gone.”

Lovetts carried out its analysis on the back of recent figures from the Federation of Small Businesses, which said that 73% of its members have suffered a late payment in the last 12 months.

Wilson said: “Whilst it is encouraging that businesses are chasing up payments so much quicker, it is also worryingly similar to the pattern we observed just before the credit crunch hit in 2008.

“With speculation that problems in the Eurozone could cause a second financial crisis in the UK, it seems businesses are building their reserves by getting money in without delay, providing a financial buffer should the economic situation deteriorate.”