SMEs urge shortening of legal supply payment deadlines

A survey by the Korea Federation of SMEs (KBIZ) reveals that 71% of subcontracted small and medium-sized enterprises (SMEs) believe shortening the legal payment deadline for supply goods would improve business management. While current laws allow for a 60-day payment period, 60.6% of respondents identified 30 days as the most appropriate timeframe for receiving payments.

Subcontracted firms cited improved cash liquidity (55.3%) and smoother payments to their own clients (40.9%) as the primary benefits of shorter terms. However, the survey also highlighted challenges for entrusting companies. Approximately 25.7% of entrusting firms reported that shortening the deadline would be difficult, with 74.1% of those citing concerns over securing working capital and potential deterioration of short-term liquidity.

To mitigate these risks, 58.4% of respondents suggested expanding low-interest loans and guarantees for working capital as a necessary supporting policy. The survey, conducted among 500 SMEs involved in subcontracting transactions, emphasizes the need for complementary measures to address the timing gap between receiving payments from upper-tier companies and paying lower-tier suppliers.