The average payment period for small and medium enterprises (SMEs) improved by two days to 57 days in the second quarter, small business body Isme said. However, late payments are continuing to cause liquidity issues for some, it warned.

Isme’s latest survey on credit trends found 17 per cent of small firms were experiencing payment delays of three months or more, down from 24 per cent in the first quarter.

"Because of the abusive dominance of big business, cash flow across the SME sector is slow. This market failure is allowed to happen because of the complete lack of Government intervention," said Isme chief executive Mark Fielding.

Isme has called on the Government to review laws on prompt payments and “name and shame” large firms that are late to pay.