A survey of Companies House accounts showed contractors with 10-49 employees and a turnover between £2m – £10m were the worst hit with each on average £627,000 in debt.

Commercial debt recovery law firm Debt Guard Solicitors carried out the survey of 550 construction SMEs.

Firms with 1-9 employees and a turnover less than £2m each had an average trade debt of £41,000.

Medium-sized companies with 50-249 employees and a turnover between £10m – £100m had the highest levels of SME trade debt at an average of £969,000.

Mark Burgess, Chief Operating Officer at Debt Guard Solicitors, said: “This research highlights the financial headache caused by outstanding and unpaid bills in the construction sector.

“It is clear that smaller SMEs in particular need much greater support in this respect, as many are facing the very real threat of closure due to trade debt pressure.

“Our message to all construction SMEs struggling with late payment is, ‘don’t write off your debt’, look at legal ways to professionally recover it as, by improving credit flow, this will help put your business on a more stable financial footing.”

Trade debt stands for money owed to a business – including current invoices and overdue payments – for goods and services supplied to customers over the course of a financial year.