CASH flow problems caused by late payment could spell seasonal trouble for businesses in the North-west.

The warning follows survey research from Lloyds TSB Commercial, which shows that in spite of legislation to improve the UK payment culture, late payment remains the chief cause of unhealthy cash flow among British firms.

Businesses throughout the region said the Late Payment of Commercial Debts (Interest) Act 1998 -- the second phase of which became law last month -- has had little or no impact.

Although 84 per cent of firms surveyed were aware of the legislation, only two per cent had actually applied it.

Lloyds TSB says this could be due to the fear of spoiling commercial relationships and losing business.

Mr Mark Brotherton, senior area manager at Lloyds TSB Commercial in the North-west, said: "Late payment is still wreaking havoc amongst companies in the UK.

"It's traditionally the single biggest source of cash flow problems.

"Businesses would be wise to tighten up procedures for making and receiving payments to minimise Christmas money worries.

"Sometimes merely putting reminder labels on your invoices and mentioning that unpaid invoices will be referred to a collection service is a sufficient catalyst to get payment."