A survey commissioned by Kiwibank has found small businesses are sitting on unpaid invoices of $2.5 billion each month.
The survey of 411 businesses employing 19 or fewer staff found small businesses are collectively spending 18 million hours a year trying to get their invoices paid.
Kiwibank head of business banking Mark Stephen said the survey was sparked by feedback from Kiwibank's small business customers.
"The feedback we've had from our customers in the market place for a while around what was often cited as the biggest constraint on small businesses growing is that of cashflow and the influence of late and unpaid invoices," Mr Stephen said.
He was surprised the number of unpaid invoices, and what they added up to each month and said it put into perspective the effect it had on small businesses.
"It equates to the equivalent of one working week for somebody in each of these businesses spent nothing other than chasing payment of invoices," he said.
"That's time, in our view, that would be much better spent producing and selling goods and services rather than chasing late payment."
The economy could perform better if people paid their bills on time, and the bank had a role to play in that through such things as providing more ways for customers to pay, such as web payments, mobile payments or recurring payments.
It could also reduce the administrative burden on the businesses by e-invoice options, Mr Stephen said.