New regulations on late payment are being introduced for all companies, which will set a 30 days credit period and impose significant penalty interest on defaulters.
Research by the Irish Small to Medium Enterprises Association has revealed that the average credit period in Ireland is 60 days.
ISME Chief Executive, Mark Fielding, is welcoming many aspects of the new regulations. He added, however, that it would provide difficulties for smaller businesses if not monitored correctly.
"Larger businesses have always taken a cavalier attitude towards paying their bills," he said.
"If that is the case, the small guy will be caught in a wedge in the middle, and will suffer negative cash flow in the short to medium term, thereby having to borrow at fairly high interest rates."