Changes to late payment legislation to aid debt recovery for small businesses will be introduced tomorrow.

Research by the Credit Services' Association has shown 85 per cent of small business are unaware of the benefits from the new rules.

The changes have been brought in as part of the second phase of the Late Payment of Commercial Debts (Interests) Act 1998.

The Act enabled small businesses to claim interest on debts incurred under contracts agreed with large businesses and the public sector after the law came into effect.

Rights to claim interest will be extended from next month.

Small businesses will be now able to claim from other small businesses under the same terms.

Stephen Lewis, CSA president, said: "The right to claim interest is a powerful tool when exercised correctly and it would be shameful for businesses to miss out simply because of a lack of awareness."

Managing director of Hove-based JG Media Associates Jasmine Gayton said late payment could cause problems for her company, a media sales organisation.

She said: "I will definitely take advantage of being able to charge for late payment. I often find myself chasing accounts which have been outstanding for three or four months and it takes a lot of time. I hope the legislation will ultimately help all small businesses to prosper."

Sussex Enterprise has welcomed the legislation as a positive move to assist cash flow for small business but the organisation has received mixed feedback from its member companies.

Sussex Enterprise marketing director Alan Brooks said: "Many businesses have told us they have run up against problems enforcing their rights. We urge Government to engage more directly with the businesses involved to find effective measures for implementing the new laws."