Bangkok: The government is revising the "credit term" rules to prevent large corporations from delaying payments to small and medium-sized enterprises (SMEs), with agricultural sector payments to be capped at 30 days.
According to Thai News Agency, the revision of credit term regulations is being spearheaded by Deputy Prime Minister and Minister of Commerce, Ms. Supajee Suthamphan, to address the persistent issue of large businesses delaying payment for goods and services. This delay often leaves SMEs lacking the necessary working capital to operate efficiently. As part of the new regulations, the Trade Competition Commission (TCC) has approved a draft announcement that mandates a payment timeframe of no more than 30 days for agricultural products or primary processed agricultural products, and no more than 45 days for sectors such as general trade, manufacturing, and services, unless there are justified business reasons.
Ms. Lalida Periswiwatana, Deputy Spokesperson for the Prime Minister's Office, emphasized that the regulation adjustments are not just about setting a limit on the number of days but also include measures to prevent SMEs from being exploited. Large buyers are required to clearly state their payment procedures, are prohibited from delaying payments without legitimate reasons, and must not alter credit terms or contract conditions without providing at least 60 days' notice.
Additionally, should the facts or evidence concerning a complaint be within the knowledge of the major buyer, the buyer is obligated to present those details to the Trade Competition Commission. This stipulation is aimed at reducing the burden of proof for SMEs, which often have less information and bargaining power. Violations of these regulations, particularly those that constitute unfair trade practices, may result in administrative fines of up to 10% of the offending company's revenue in the year the offense occurred. "SMEs should receive payment on time and fairly, not have to bear the burden of working capital for larger businesses. This adjustment to the regulations will help clarify the responsibilities of large businesses, reduce the burden on smaller businesses, and allow money to circulate more quickly within SMEs," stated Ms. Lalida.
The 30- and 45-day credit term frameworks are already part of the existing regulations. This revision focuses on closing enforcement loopholes and clarifying the responsibilities of larger businesses. Currently, the draft regulation remains in the drafting stage and is not yet in effect. It is stipulated to take effect 30 days following its publication in the Royal Gazette.