The Small Firms Association is calling for the introduction of measures to make it easier to demand prompt payment.
A new report shows that the majority of small businesses are facing cash flow difficulties because of late payment by clients.
The Small Firms Association found that State agencies like the HSE are among the worst offenders.
The Small Firms Association said companies should be able to pursue payment through the small claims court, rather than launching costly legal actions.
Patricia Callan of the SFA said late payments can have a very negative impact on start-up companies.