The Fair Trade Commission will cut large retailers' payment deadlines to about half. The move is aimed at easing suppliers' cash burdens and improving transaction stability.
The Korea Fair Trade Commission (FTC) said on the 28th that it "prepared and announced improvement measures on payment deadlines through revisions to the Act on Fairness in Large Retail Business."
For direct-purchase transactions, the deadline will be shortened from 60 days to 30 days from the date of receipt of goods, and for special contract purchase, consignment, and lease transactions, it will be reduced from 40 days to 20 days from the sales closing date.
However, even when transacting via direct purchase, an exception is made for the "once-a-month settlement method," in which one month's purchases are tallied at once. In this case, payment must be made within 20 days from the purchase closing date (the last day of the month).
A full survey the Korea Fair Trade Commission (FTC) conducted on 132 large retailers across 11 business types found that the average payment period was shorter than the statutory deadline: 27.8 days for direct purchase, 23.2 days for special contract purchase, 21.3 days for consignment, and 20.4 days for lease.
However, nine companies, including Coupang, paid on average 53 days after receiving goods. The average payment periods were 52.3 days for Coupang, 59.1 days for Asung Daiso Co., 54.6 days for Kurly, 54.5 days for M Chuncheon branch and Megamart, 52.0 days for Etland, 46.2 days for Homeplus Co., and 40.9 days for Homeplus Express. Notably, Young Poong Bookstore recorded 65.1 days, exceeding the statutory deadline of 60 days.
The Korea Fair Trade Commission (FTC) noted, "With incidents involving Tmon and WeMakePrice, and Homeplus Co.'s rehabilitation proceedings, unpaid settlements have been recurring," adding, "Improving the safety of settlements and liquidity for suppliers is urgent."
Meanwhile, to give retailers enough time to prepare for shorter payment deadlines, including overhauling settlement systems, the Korea Fair Trade Commission (FTC) plans to implement the revisions after a one-year grace period following the law's promulgation.