Building Materials Perspective. "Regulations on the Protection of Payment for Small and Medium-sized Enterprises"-the right moat of building materials enterprises.
Published:
2022-07-27
According to the 2022 China Corporate Payment Survey released by Coface, 53% of the companies surveyed experienced late payments in 2021, down from 57% in 2020. However, the average time to late payments rose from 79 days in 2020 to 86 days in 2021. The construction industry still has the longest overdue payment period of 109 days. In addition, the proportion of surveyed enterprises with ultra-long overdue payments accounting for more than 2% of annual turnover has increased significantly, from 47% in 2020 to 64% in 2021. Among them, the industry with the highest proportion of enterprises with long overdue payments accounting for more than 10% of annual turnover is also the construction industry (56%). In Coface's experience, 80% of ultra-long overdue payments may never be recovered. If the amount of ultra-long-term overdue payments accounts for more than 2% of annual turnover, you may be exposed to cash flow risk. From the above survey data, it can be seen that small and medium-sized construction materials companies belong to the downstream supply side of the construction industry, and are also in the hardest hit areas of cash flow risk, requiring additional support and protection. Background of the Regulations on Guaranteeing Payment for Small and Medium-sized Enterprises in 1. In recent years, affected by the complex and changeable economic situation at home and abroad and the downward pressure of the economy, the payback period of small and medium-sized enterprises has been extended, and some government organs, institutions and large enterprises have the problem of defaulting on small and medium-sized enterprises to varying degrees. it seriously infringes upon the legitimate rights and interests of small and medium-sized enterprises, aggravates the financial difficulties of small and medium-sized enterprises, and even endangers their survival. In this regard, the Party Central Committee and the State Council attach great importance to the payment of small and medium-sized enterprises. At the 2018 private enterprise symposium, General Secretary Xi Jinping asked to correct the behavior of some government departments and large enterprises that used their dominant position to bully the small and default on private enterprises, and repeatedly gave important instructions and instructions on establishing a long-term mechanism to prevent arrears. On September 4, 2019, the Ministry of Industry and Information Technology website published the Measures for the Administration of Timely Payment of Small and Medium-sized Enterprises (Draft for Comments), and after nearly a year, the Regulations on Guaranteeing Payment of Small and Medium-sized Enterprises (hereinafter referred to as the "Regulations") will come into effect on September 1, 2020. It can be seen that the main purpose of the regulations is to ensure that the funds of small and medium-sized enterprises are paid in a timely manner, alleviate the financial pressure of small and medium-sized enterprises, effectively protect the legitimate rights and interests of small and medium-sized enterprises, and optimize the business environment. A typical case of 2. use of the Regulations on Guaranteeing Payment of Small and Medium-sized Enterprises -- Taking the assumption of deferred payment liquidated damages as an example According to the above cases, it can be seen that in the building materials sales contract, the building materials purchaser generally provides the format text, while in the case of the building materials supplier signing the sales contract, even if there is no agreement on the overdue payment interest, in order to protect the interests of small and medium-sized enterprises, in the case of the building materials purchaser's breach of contract, the court can invoke Article 15 of the Regulations on Guaranteeing Payment for Small and Medium-sized Enterprises, "If government organs, institutions and large enterprises delay in making payments to small and medium-sized enterprises, they shall pay overdue interest. If the parties have an agreement on the interest rate for overdue interest, the agreed interest rate shall not be lower than the market quoted rate for one-year loans at the time of the conclusion of the contract; if no agreement is made, the overdue interest shall be paid at the daily interest rate of five ten thousandth." Therefore, the court ruled that the buyer of building materials should pay the overdue interest at the rate of five ten thousandments per day. Key elements of the 3. Regulations in terms of payment protection In addition to the overdue interest involved in the above-mentioned cases, the Regulations regulate the payment period of agencies, institutions and large enterprises, clarify inspection and acceptance requirements, prohibit disguised arrears, regulate the collection and settlement of deposits, publicize the information of arrears, and establish and improve complaints And supervision and evaluation mechanisms, clarifying the responsibility for delayed payment, etc. Specifically reflected in: (I) regulate payment behavior The Regulations provide for two main aspects: first, to regulate the payment period. It is stipulated that government organs and institutions purchasing goods, projects and services from small and medium-sized enterprises shall pay within 30 days from the date of delivery of the goods, projects and services, and if otherwise agreed in the contract, the maximum payment period shall not exceed 60 days; when large enterprises purchase goods, projects and services from small and medium-sized enterprises, they shall reasonably agree on the payment period and make timely payment in accordance with industry norms and trading habits; if the contract stipulates that settlement methods such as performance progress settlement and regular settlement shall be adopted, the payment period shall be calculated from the date on which the settlement amount is confirmed by both parties. Second, clear inspection and acceptance requirements. In view of the common problem of arrears of accounts owed to small and medium-sized enterprises due to failure to inspect and accept in time in practice, it is stipulated that if government organs, institutions and large enterprises agree with small and medium-sized enterprises to pass inspection or acceptance as the condition of payment, the payment period shall be calculated from the date of inspection or acceptance; both parties to the contract shall agree on a clear and reasonable inspection or acceptance period in the contract, and complete the inspection or acceptance within that period; if the inspection or acceptance is delayed, the payment period shall be calculated from the date of expiration of the agreed inspection or acceptance period. (II) prevention of delinquency The regulations mainly provide for three aspects: first, the prohibition of disguised arrears. It is stipulated that organs, institutions and large enterprises that use non-cash payment methods such as commercial bills to pay for small and medium-sized enterprises shall make clear and reasonable agreements in the contract, and shall not force small and medium-sized enterprises to accept non-cash payment methods such as commercial bills, and shall not use commercial bills to extend the payment period in disguise; it is not allowed to change the legal representative or the main person in charge to perform the internal payment process, or in the absence of an agreement in the contract, on the grounds of waiting for the approval of the completion acceptance, final accounts audit, etc.; refuse or delay the payment of small and medium-sized enterprises; unless otherwise agreed in the contract or otherwise provided by laws and administrative regulations, government agencies, institutions and Large state-owned enterprises shall not force the audit results of the auditing agency to be used as the basis for settlement. The second is to regulate the collection and settlement of margin. It is stipulated that except for the bid bond, performance bond, project quality bond, and migrant worker wage bond established in accordance with the law, no other bond shall be collected during the construction of the project, and the bond shall not be limited to cash; the deposit collection ratio shall comply with the relevant national regulations; after the guarantee period expires, The deposit shall be verified and settled in a timely manner. The third is to clarify the liability for delay in payment. If it is stipulated that government organs, institutions and large enterprises delay in making payments to small and medium-sized enterprises, they shall pay overdue interest in accordance with the contract and the interest rate standards stipulated in these Regulations. Organs and institutions that refuse or delay the payment of small and medium-sized enterprises shall take necessary restrictive measures in terms of official consumption, office space, and funding arrangements. In addition, the regulations also provide for the standardization of contract conclusion and fund guarantee, the establishment of information disclosure system, punishment system for breach of trust and credit supervision and evaluation mechanism. 4. epilogue As we all know, as an indispensable part of the industrial economic chain, small and medium-sized enterprises are in an obvious weak position in obtaining trading opportunities, capital turnover, risk resistance and so on. The "Regulations on Guaranteeing Payment of Small and Medium-sized Enterprises" balances the market transaction status of all parties, provides a legal guarantee for all parties to carry out transactions on the basis of substantial equality, and fully reflects the advantages of national macro-control. As small and medium-sized building materials enterprises, they should fully understand and flexibly use the regulations, and take it as a moat to protect their own rights and interests when their rights and interests are infringed.
According to the 2022 China Corporate Payment Survey released by Coface, 53% of the companies surveyed experienced late payments in 2021, down from 57% in 2020. However, the average time to late payments rose from 79 days in 2020 to 86 days in 2021. The construction industry still has the longest overdue payment period of 109 days. In addition, the proportion of surveyed enterprises with ultra-long overdue payments accounting for more than 2% of annual turnover has increased significantly, from 47% in 2020 to 64% in 2021. Among them, the industry with the highest proportion of enterprises with long overdue payments accounting for more than 10% of annual turnover is also the construction industry (56%). In Coface's experience, 80% of ultra-long overdue payments may never be recovered. If the amount of ultra-long-term overdue payments accounts for more than 2% of annual turnover, you may be exposed to cash flow risk.
From the above survey data, it can be seen that small and medium-sized construction materials companies belong to the downstream supply side of the construction industry, and are also in the hardest hit areas of cash flow risk, requiring additional support and protection.
Background of the Regulations on Guaranteeing Payment for Small and Medium-sized Enterprises in 1.
In recent years, affected by the complex and changeable economic situation at home and abroad and the downward pressure of the economy, the payback period of small and medium-sized enterprises has been extended, and some government organs, institutions and large enterprises have the problem of defaulting on small and medium-sized enterprises to varying degrees. it seriously infringes upon the legitimate rights and interests of small and medium-sized enterprises, aggravates the financial difficulties of small and medium-sized enterprises, and even endangers their survival. In this regard, the Party Central Committee and the State Council attach great importance to the payment of small and medium-sized enterprises. At the 2018 private enterprise symposium, General Secretary Xi Jinping asked to correct the behavior of some government departments and large enterprises that used their dominant position to bully the small and default on private enterprises, and repeatedly gave important instructions and instructions on establishing a long-term mechanism to prevent arrears. On September 4, 2019, the Ministry of Industry and Information Technology website published the Measures for the Administration of Timely Payment of Small and Medium-sized Enterprises (Draft for Comments), and after nearly a year, the Regulations on Guaranteeing Payment of Small and Medium-sized Enterprises (hereinafter referred to as the "Regulations") will come into effect on September 1, 2020.
It can be seen that the main purpose of the regulations is to ensure that the funds of small and medium-sized enterprises are paid in a timely manner, alleviate the financial pressure of small and medium-sized enterprises, effectively protect the legitimate rights and interests of small and medium-sized enterprises, and optimize the business environment.
A typical case of 2. use of the Regulations on Guaranteeing Payment of Small and Medium-sized Enterprises -- Taking the assumption of deferred payment liquidated damages as an example
According to the above cases, it can be seen that in the building materials sales contract, the building materials purchaser generally provides the format text, while in the case of the building materials supplier signing the sales contract, even if there is no agreement on the overdue payment interest, in order to protect the interests of small and medium-sized enterprises, in the case of the building materials purchaser's breach of contract, the court can invoke Article 15 of the Regulations on Guaranteeing Payment for Small and Medium-sized Enterprises, "If government organs, institutions and large enterprises delay in making payments to small and medium-sized enterprises, they shall pay overdue interest. If the parties have an agreement on the interest rate for overdue interest, the agreed interest rate shall not be lower than the market quoted rate for one-year loans at the time of the conclusion of the contract; if no agreement is made, the overdue interest shall be paid at the daily interest rate of five ten thousandth." Therefore, the court ruled that the buyer of building materials should pay the overdue interest at the rate of five ten thousandments per day.
Key elements of the 3. Regulations in terms of payment protection
In addition to the overdue interest involved in the above-mentioned cases, the Regulations regulate the payment period of agencies, institutions and large enterprises, clarify inspection and acceptance requirements, prohibit disguised arrears, regulate the collection and settlement of deposits, publicize the information of arrears, and establish and improve complaints And supervision and evaluation mechanisms, clarifying the responsibility for delayed payment, etc. Specifically reflected in:
(I) regulate payment behavior
The Regulations provide for two main aspects: first, to regulate the payment period. It is stipulated that government organs and institutions purchasing goods, projects and services from small and medium-sized enterprises shall pay within 30 days from the date of delivery of the goods, projects and services, and if otherwise agreed in the contract, the maximum payment period shall not exceed 60 days; when large enterprises purchase goods, projects and services from small and medium-sized enterprises, they shall reasonably agree on the payment period and make timely payment in accordance with industry norms and trading habits; if the contract stipulates that settlement methods such as performance progress settlement and regular settlement shall be adopted, the payment period shall be calculated from the date on which the settlement amount is confirmed by both parties. Second, clear inspection and acceptance requirements. In view of the common problem of arrears of accounts owed to small and medium-sized enterprises due to failure to inspect and accept in time in practice, it is stipulated that if government organs, institutions and large enterprises agree with small and medium-sized enterprises to pass inspection or acceptance as the condition of payment, the payment period shall be calculated from the date of inspection or acceptance; both parties to the contract shall agree on a clear and reasonable inspection or acceptance period in the contract, and complete the inspection or acceptance within that period; if the inspection or acceptance is delayed, the payment period shall be calculated from the date of expiration of the agreed inspection or acceptance period.
(II) prevention of delinquency
The regulations mainly provide for three aspects: first, the prohibition of disguised arrears. It is stipulated that organs, institutions and large enterprises that use non-cash payment methods such as commercial bills to pay for small and medium-sized enterprises shall make clear and reasonable agreements in the contract, and shall not force small and medium-sized enterprises to accept non-cash payment methods such as commercial bills, and shall not use commercial bills to extend the payment period in disguise; it is not allowed to change the legal representative or the main person in charge to perform the internal payment process, or in the absence of an agreement in the contract, on the grounds of waiting for the approval of the completion acceptance, final accounts audit, etc.; refuse or delay the payment of small and medium-sized enterprises; unless otherwise agreed in the contract or otherwise provided by laws and administrative regulations, government agencies, institutions and Large state-owned enterprises shall not force the audit results of the auditing agency to be used as the basis for settlement. The second is to regulate the collection and settlement of margin. It is stipulated that except for the bid bond, performance bond, project quality bond, and migrant worker wage bond established in accordance with the law, no other bond shall be collected during the construction of the project, and the bond shall not be limited to cash; the deposit collection ratio shall comply with the relevant national regulations; after the guarantee period expires, The deposit shall be verified and settled in a timely manner. The third is to clarify the liability for delay in payment. If it is stipulated that government organs, institutions and large enterprises delay in making payments to small and medium-sized enterprises, they shall pay overdue interest in accordance with the contract and the interest rate standards stipulated in these Regulations. Organs and institutions that refuse or delay the payment of small and medium-sized enterprises shall take necessary restrictive measures in terms of official consumption, office space, and funding arrangements.
In addition, the regulations also provide for the standardization of contract conclusion and fund guarantee, the establishment of information disclosure system, punishment system for breach of trust and credit supervision and evaluation mechanism.
4. epilogue
As we all know, as an indispensable part of the industrial economic chain, small and medium-sized enterprises are in an obvious weak position in obtaining trading opportunities, capital turnover, risk resistance and so on. The "Regulations on Guaranteeing Payment of Small and Medium-sized Enterprises" balances the market transaction status of all parties, provides a legal guarantee for all parties to carry out transactions on the basis of substantial equality, and fully reflects the advantages of national macro-control. As small and medium-sized building materials enterprises, they should fully understand and flexibly use the regulations, and take it as a moat to protect their own rights and interests when their rights and interests are infringed.
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