Late payment repeat offenders to be named and shamed

But large firms will not have to abide by mandatory maximum payment times, as recommended in an independent review, with the federal government agreeing it would "do more harm than good".

The review said a mandatory regime for paying on time could disincentivise large businesses from using smaller suppliers.

Small business minister Julie Collins said the measures would level the playing field for smaller firms.

"This is a matter of fairness - big businesses should not take advantage of Australia's 2.5 million small businesses by failing to pay them on time," she said.

Late payments can lead to cash flow problems and weigh on productivity, the review found, with small businesses particularly vulnerable as they don't have the market power to negotiate with bigger firms.

Central to the government's plan is making the identities of the best and worst payers public.

Other changes include considering payment times in government procurement and other public sector policies, and lightening the regulatory burden for entities reporting under the Payment Times Reporting Scheme.

More than $8 million will be spent on the measures aimed at easing pressures on small businesses.

Council of Small Business Organisations Australia chief executive officer Luke Achterstraat said cash flow was a critical issue for small businesses.

"Particularly in a cost-of-doing-business crisis," he said.

"Timely and reliable payments to small businesses not only from bigger companies but also government are much needed at a time when 43 per cent of small firms are not making a profit."

Australian Associated Press