MORE than half of all small and medium sized enterprises (SMEs) are afraid to penalise late-paying customers out of fear of losing business.
Meanwhile, ministers in the UK are to "go to war" on companies that won't pay their bills on time.
This will include "naming and shaming" large companies that fail to honour commitments to meeting bills in a timely manner, according to a report by the 'Sunday Telegraph'.
In Ireland, most SMEs fear large customers are too big to take on over payment delays.
Sixty three percent of companies are reluctant to impose interest penalties when bills are past due, because they think the customer is too big to challenge, a survey found.
Two-thirds of business owners fear they would gain a reputation for being difficult if they insist on being paid on time or try to apply financial penalties allowed under EU law, according to a survey by the Small Firms Association.
"Getting paid on time is a never-ending problem for most small businesses. Late payment causes serious cash flow problems; requires firms to extend overdraft facilities or engage in additional borrowing and consumes a great deal of management time," said Patricia Callan of the SFA.
Ultimately that affects companies' ability to compete and expand, she said.
The survey found that 68pc of companies experience late payments on their credit terms. The average time it takes for bills to be settled is 62 days.
Fewer than one in four includes late payment charges in credit contracts, the survey found.
It means most businesses are not compensated when bills are settled late, and in many cases customers do not suffer any penalty for their tardiness.
The UK government's "war on late" payments has been prompted by complaints from the SME sector.