THE Small Firms Association has called for new legislation requiring Government Departments, State agencies and local authorities to pay their bills on time.

Mr Brendan Butler, SFA director, yesterday urged the introduction of financial penalties for all companies and bodies for late payment of bills. In a statement, he warned that in the absence of such legislation many small companies would close.

While late payment is "endemic" in Irish society, the SFA said that a number of Government departments and state agencies are among the worst offenders.

"It is self defeating for the State in its industrial development role to assist small business at the same time as the payment practices of state bodies and agencies hinder it," Mr Butler said. Ireland, he added, is the only EU State which has failed to act on late payment.