Payment period for goods sold by large retailers to be shortened from 60 to 35 days

[Financial News] The period for large retailers such as Coupang to pay suppliers for goods is expected to be significantly shortened. The payment period for goods purchased directly from suppliers will be reduced from the current maximum of 60 days to 35 days. For special-contract purchases and consignment transactions, in which department stores and supermarkets bring in goods on credit and pay suppliers after the goods are sold, the payment deadline will be shortened from the current 40 days to 20 days.
According to the National Assembly of the Republic of Korea on the 2nd, the National Policy Committee held a meeting of its First Subcommittee on Bills and reviewed a package of amendments to the Act on Fair Transactions in Large Retail Business the previous day. It then passed an amendment containing these provisions.
In December last year, the Fair Trade Commission announced a plan to halve the payment deadline for direct purchases from 60 days to 30 days and the deadline for special-contract purchases and consignment transactions from 40 days to 20 days. The ruling and opposition parties agreed on the need to shorten the deadlines. However, after discussing the basis for setting the direct-purchase deadline at 30 days and the burden it could place on the industry during the subcommittee review, they reached a compromise of 35 days—five days longer than the government’s proposal. The deadline for special-contract purchases and consignment transactions will remain at 20 days, as proposed by the Fair Trade Commission.
If the amendment takes effect, retailers such as Coupang and Kurly Inc., which pay suppliers more slowly than the industry average, are expected to come under its direct impact. In a survey last year of 132 large retailers with sales of at least 1,000 billion won in the previous fiscal year, the Fair Trade Commission found that the industry average payment period for direct purchases was 27.8 days. Coupang, by contrast, took an average of 52.3 days, while Kurly Inc. took 54.6 days.
The amendment is expected to be submitted to a plenary session after review by the full National Policy Committee and the Legislation and Judiciary Committee.
[email protected] Song Ji-won Reporter