LG Electronics is taking the lead in building a sound corporate ecosystem by expanding win-win payments with partners.
Five related ministries, including the Fair Trade Commission, the Ministry of SMEs and Startups, and the Ministry of Employment and Labor, held the ‘Fair Economy Performance Reporting Contest’ at the annex of the government complex in Seoul on the 6th and introduced companies that showed excellent results in win-win settlement, job opening, and technical support. .
On this day, LG Electronics was selected as an exemplary case of contributing to enhancing the financial liquidity of suppliers through win-win settlement and spreading win-win settlement to secondary suppliers.
At the event that day, LG Electronics announced a case in which the payment environment was improved even to secondary partners. Next, LG Electronics’ secondary supplier, Taeyang SCR, introduced a case of securing financial liquidity and enhancing management stability by receiving payment for goods from the primary supplier as a win-win payment.
Earlier this year, LG Electronics was also recognized for its contribution to spreading win-win payment to secondary partners, and was selected as an ‘excellent win-win payment company’ by the Large, Small and Medium Enterprises and Agriculture and Fishery Cooperation Foundation.
Last year, LG Electronics paid 7,148.4 billion won in a win-win payment method to its first-tier suppliers. Of this, 531.4 billion won was paid to secondary suppliers, and the rate of dripping through win-win settlement recorded 7.4%, the highest among large domestic companies.
The falling water rate refers to the rate at which the product price paid by a large company to a primary supplier is delivered to secondary and lower suppliers. LG Electronics predicts that the win-win payment rate will exceed double digits due to the expansion of win-win payments this year.
LG Electronics is encouraging the participation of tier 1 suppliers so that secondary subcontractors can receive direct help through the win-win payment system introduced in 2015. Partners participating in the win-win settlement are given various benefits by giving additional points in the regular evaluation. In addition, the win-win settlement performance is reflected in the conditions for suppliers to join the LG Electronics Win-Win Cooperation Fund. When partners need funds, they can get a low-interest loan through the Win-Win Cooperation Fund.
The purpose of the win-win payment is to support the payment of goods paid by large companies to the primary suppliers to the secondary and lower suppliers. When a large company deposits the product price in a dedicated account of a financial institution, the payment is paid to the secondary subcontractors on the payment date. This system guarantees that suppliers can receive cash payments on the payment date, and secondary and lower-tier suppliers are useful because they can cash out goods early on the basis of credit to large companies before the payment date.
For win-win growth, LG Electronics has been implementing various partner support policies based on five major tasks: strengthening competitiveness, developing next-generation technology, providing funding, supporting education, and improving infrastructure.
Cheol-min Wang, managing director of LG Electronics’ Purchasing/SCM Management Center, said, “We will work together with our suppliers so that the warmth of win-win can be transmitted to sub-contractors.”