The attempts of British businesses to stay afloat during the credit crunch are being hampered by up to a billion unpaid bills across the EU.

Research by the continent’s largest credit management agency has found that companies are often left struggling to stay solvent because clients either settle invoices late or not at all.

The study by Intrum Justitia concluded that even though British businesses were better than counterparts in Italy, Portugal or Spain in paying bills they still took almost twice as long as companies in Scandinavia to make payments due after one month.

And that, said Intrum Justitia’s UK Managing Director, Owen James, sometimes had catastrophic consequences for firms which had done work but were left waiting longer than they should for the cash they were owed.

“Businesses both large and small rely on prompt payment in order to meet their obligations, including paying wages and their own suppliers. Settling a bill on time is more than a mere courtesy. In the current economic climate, when lines of credit are being reduced, it becomes a necessity.”

Intrum Justitia works with 90,000 client companies in 24 European countries.

The figures compiled from across the continent revealed that about one billion invoices default each year in Europe and turn into debt collection cases.

In response, the company has launched new online services for both companies and their clients to help speed up the time taken to pay bills.  The IntrumWeb and CustomerWeb facilities also allow billing firms to reach payment arrangements with clients who themselves are short of cash.

Mr James said: “There is a careful balance to be struck between collecting outstanding monies for businesses whose very survival may depend on our success and contacting customers who, through no fault of their own, may be in financial difficulty. Our services are aimed at helping to achieve that balance.

“These two developments demonstrate our commitment to improving our service levels to clients and their customers.”