A warning system should be put in place to alert small businesses about larger companies that pay bills late, a report is urging.

Research for the Small Business Commissioner suggested that two thirds of large firms take more than 30 days to pay bills.

Paul Uppal said his study indicated that one in five big businesses take at least 50 days to settle bills.

The research among more than 7,000 companies found that those in London were most prompt, paying bills in 34 days, while those in Yorkshire and the Humber were the worst, taking an average of 43 days.

The commissioner suggested a "traffic light" warning system should be established to allow small businesses to identify late payers.

He said: "Our ambition is to help small businesses make more informed choices when deciding which larger businesses they are going to trade with.

"A traffic light system would be a simple and effective visual way of highlighting which larger businesses are paying promptly and are working in partnership with their supply chain.

"Our initial findings indicate that almost two thirds of payments are likely to be owed to smaller businesses at any time. This is money that could be used to grow smaller businesses and generate tangible economic activity. Instead it is stuck on the ledgers of large businesses doing nothing."