Regulations on Safeguarding Payment by Small and Medium-sized Enterprises Promulgated

The "Regulations on Safeguarding Payment by Small and Medium-sized Enterprises" was promulgated yesterday and will come into force on September 1, 2020. There are 29 articles in the "Regulations", mainly including three aspects.


The first is to standardize the conclusion of contracts and the guarantee of funds, and to strengthen the control of the source of accounts payment. The "Regulations" stipulate that government agencies, institutions and large enterprises shall not require small and medium-sized enterprises to accept unreasonable payment terms, methods, conditions, liabilities for breach of contract and other transaction conditions, and shall not default on the payment of goods, projects and services to small and medium-sized enterprises. At the same time, we should strengthen the restriction on the guarantee of financial funds. When government agencies and institutions use financial funds to purchase goods, projects and services from small and medium-sized enterprises, they should strictly follow the approved budget, and must not carry out procurement without or beyond the budget. Funds needed for government investment projects should be ensured to be in place in accordance with the relevant provisions of the State, and construction units should not advance funds for construction.


The second is to standardize payment behavior and prevent arrears of accounts. The "Regulations" set forth requirements for payment period and inspection and acceptance. It is explicitly prohibited for government agencies, institutions and large enterprises to extend the payment period in disguised form. The collection and settlement of deposits have been standardized. It is clear that government agencies, institutions and large enterprises should pay overdue interest for delays in paying small and medium-sized enterprises, and necessary restrictive measures should be taken for government agencies and institutions in terms of official consumption, office space and funding arrangements.


The third is to strengthen credit supervision and service guarantee. Clear establishment of payment information disclosure system, complaint handling and dishonesty disciplinary system and supervision and evaluation mechanism, in order to safeguard the legitimate rights and interests of small and medium-sized enterprises, to create a good business environment.