The Federation of Small Businesses (FSB) has named and shamed Alliance Boots as one of the worst payers to small suppliers.

The small businesses lobby group has said that the practice of delaying payment to suppliers has now reached “outrageous proportions”.

The situation has worsened in the past few weeks , according to the FSB, with some suppliers being squeezed by bigger companies into waiting more than three months to be paid for goods or services.

Alliance Boots, which was acquired by a private equity consortium for£11 billion last year, has extended its payment terms to 75 days after the end of the month in which the invoice is received. It is also charging a 2.5 per cent settlement fee.

If an invoice is submitted on the first day of the month, this would equate to 105 days before payment.

While small businesses can legally charge interest on late bill payments, they are reluctant to do so because of concerns that they will lose business with large customers. The extension of payment periods by larger retailers improves short-term cash flow.

Alliance Boots told The Times that it had “aligned its arrangements with suppliers on a group-wide basis”. It added that its “procurement strategies are line with other groups of similar size”.

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