The government has welcomed Fonterra's change of policy on paying its small and medium suppliers.
The dairy co-operative has been criticised for making suppliers wait up to three months for payment.
It now says those whose contracts are worth up to $300 a year will be paid on the 20th of the following month.
Small Business Minister Stuart Nash said it will change the policy from the beginning of August.
Smaller firms make up about 86 percent of Fonterra's suppliers, and the new payment terms will affect more than$4000.