Payment Link System Finally Implemented for Small and Medium-Sized Businesses
After 14 years of anticipation, the long-awaited payment link system will finally be implemented starting tomorrow, providing a much-needed solution for small and medium-sized businesses. These businesses have often suffered the consequences of rising raw material prices without the ability to negotiate better terms. In order to prevent further losses and supply chain disruptions, a new approach is being introduced.
Under the new system, consignment companies and consignee companies will have to discuss and agree in advance on how changes in major raw material prices will be reflected in the delivery price. These agreements must then be specified in the contract itself. This proactive approach aims to provide clarity and prevent disputes down the line.
Past experiences have shown that smaller companies serving as consignees bear the brunt of rising raw material prices. Due to power imbalances, these companies often find it difficult to demand adjustments to distribution prices from larger companies, resulting in financial losses that they struggle to absorb. The implementation of the payment link system seeks to address this issue and level the playing field.
However, the system does come with some exceptions. Small consignment companies with contracts of less than 100 million won, short-term contracts of less than 90 days, or situations where both parties agree may be exempted from the system. Additionally, any consignment company caught evading the system by misusing its position can face fines of up to 50 million won and penalty points.
The Fair Trading Commission is committed to strictly enforcing the system and plans to issue corrective orders, fines, and penalty points to those who violate the regulations. This powerful deterrent aims to maintain the integrity of the system and ensure compliance from all parties involved.
On the other hand, companies that demonstrate exceptional performance in integrating the payment link system may receive benefits such as reduced fines and penalty points. They may even earn the recognition of being an excellent company for their commitment to fair practices.
The government is taking steps to assist and guide businesses throughout the implementation process. They will provide support until the end of the year and operate an ‘Anonymous Reporting Center for Linked Supply Prices’ to address any side effects or issues that may arise. To access detailed information, including the standard linked contract, non-linked contract, and a guidebook, businesses can visit the websites of the Ministry of Small and Medium Enterprises and Start-ups as well as the Fair Trading Commission.
In conclusion, the long-awaited payment link system offers hope for small and medium-sized businesses that have long struggled with the impact of rising raw material prices. The implementation of this system aims to foster fair and transparent practices, preventing losses and ensuring stability in the supply chain. By proactively addressing price changes in contracts, businesses can now navigate the challenges posed by volatile raw material prices with greater confidence and security.
– Na Yeon-su, YTN Reporter
Video editing: Jeon Jae-in
Graphics: Woo Hee-seok
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[앵커]
The payment link system, which has been a long-awaited goal of small and medium-sized businesses for 14 years, will be implemented starting tomorrow (the 4th).
When concluding a delivery contract in the future, the consignment company and the consignee company must discuss in advance how changes in the price of major raw materials will be reflected in the delivery price and specified in the contract.
Reporter Na Yeon-soo reports.
[기자]
In most cases, when raw material prices rose after a delivery contract, only small and medium-sized companies serving as consignees suffered.
There are quite a few cases where companies are unable to demand an increase in distribution prices from large companies, so they bear the losses by ‘crying and eating mustard’, which ultimately leads to chain disruption supply.
[김덕면 / 중소기업 대표(지난 4월) : 외부환경 변화로 원자재 가격이 급등하는 경우 원청사가 납품단가를 물품공급 계약서에 명시된 가격을 고수하기 때문에 많은 어려움을 겪고 있습니다.]
The delivery fee indexation system, which has been consistently requested by SMEs for 14 years, will be implemented.
In the future, when entering into a shipment / shipment transaction contract, for raw materials that account for more than 10% of the delivery price, the two business operators must agree in advance on the target, adjustment requirements, formula contact, etc. and note them in the agreement.
Even if it is a one-time or one-time transaction, if the transaction period is more than 90 days and raw materials are available, it is subject to the linking system.
However, if the consignment company is a small business, a small contract of less than 100 million won, a short-term contract of less than 90 days, or if both parties agree, it is exempted.
If a consignment company is caught avoiding the application of the indexing system by evading the law by misusing its position, it will be liable to a fine of up to 50 million won and penalty points.
[한기정 / 공정거래위원장(지난 8월) : 미연동 계약을 강요하는 경우는 제도 근간을 흔드는 아주 심각한 법 위반이라고 보고 있습니다. 시정명령, 과태료와 함께 벌점도 부과하는 등 강력하게 제재해나갈 계획입니다.]
On the other hand, depending on the integration performance, you may receive benefits such as reduced fines and penalty points, and choose as an excellent company for linking.
The government will provide guidance until the end of the year and operate an ‘Anonymous Reporting Center for Linked Supply Prices’ to prepare for side effects such as split contracts or mandatory agreements.
Detailed information on the linking system, standard linked contract, non-linked contract and guidebook can be found on the websites of the Ministry of Small and Medium Enterprises and Start-ups and the Fair Trading Commission.
This is Na Yeon-su from YTN.
Video editing: Jeon Jae-in
Graphics: Woo Hee-seok
※ ‘Your report becomes news’
[카카오톡] Search YTN and add a channel
[전화] 02-398-8585
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