Nearly half of small business owners are not paying themselves and are putting up prices, research has found.

Accounting software company Xero's just-released research showed 46 per cent of 500 small business owners and 60 per cent of sole traders were not paying themselves, in order to keep afloat in the face of rising costs and cash flow struggles.

More than half the respondents say they have increased prices to cover cash flow challenges, while 48 per cent say they have reviewed their operations to cut costs.

Xero country manager Bridget Snelling says small business owners are under significant financial stress, which is affecting their health.

"When small business owners experience cash flow issues, one of the first things to go is their own pay, followed by an inability to pay suppliers, which has a ripple effect throughout the economy.

"It's a systemic and volatile cycle, which sees business owners dipping into their own personal savings, working unattainable hours and ultimately sacrificing their own emotional and physical wellbeing to stay afloat."

About 80 per cent of respondents said they were stressed about their finances and 60 per cent said they were having trouble sleeping because of the issues facing their businesses.

"Cash flow is one of the biggest challenges small businesses are facing.

"When you add in inflation, climbing interest rates and reduced spend from consumers, small business owners are walking a tightrope every day."

Almost half of all respondents say high inflation, which was at 6.7 per cent in late April, affected their cash flow over the past six months.

Snelling urges bigger businesses to pay their invoices within 10 working days, saying it will help to ease the pressures small business owners are facing.

"Getting paid on time is crucial for small business operations. Unlike large businesses, SMEs don't typically have the working capital available to manage the sometimes ridiculous time between doing the mahi and getting paid for it."

Xero research last year showed late invoice payments cost small businesses $456 million annually, Snelling says.

-RNZ.