Gwangju City-Gwangju Bank Sign Business Agreement on 'Mutual Growth Payment System Operation'

Stable Support for Collection of Mid-term Contract Payments

Gwangju Metropolitan City (Mayor Kang Ki-jung) announced on the 24th that it has signed a “Mutual Growth Payment System Operation Agreement” with Gwangju Bank, the city’s treasury bank, to introduce a mutual growth payment system in the public sector.

The agreement ceremony was held with the attendance of Moon Young-hoon, Deputy Mayor of Gwangju, and Lee Woo-kyung, Vice President of Gwangju Bank.

The “Mutual Growth Payment System” is an alternative payment method to promissory notes implemented to resolve the damages caused by delayed payment collection or promissory notes when paying delivery fees between companies. It is an electronic payment method where the payment amount that a trading company (prime contractor) with a direct transaction relationship with a local government will pay to a subcontractor is safely stored in a dedicated mutual growth payment account and then paid in cash on the payment date. If necessary, subcontractors can convert the payment into cash early before the due date, securing liquidity of funds.

This system was first implemented in the private sector to eliminate the chain bankruptcy damages caused by promissory notes during payment of delivery fees. In October 2021, the “Act on the Promotion of Mutual Growth Cooperation between Large and Small-Medium Enterprises” was amended, and related guidelines were established last June, expanding and implementing the system to local governments as well.

According to the agreement, Gwangju City plans to use the mutual growth payment system to pay for public procurement of services and goods starting from November.

Deputy Mayor Moon Young-hoon said, “The mutual growth payment system will play a significant role in creating an environment for mutual growth between companies and increasing liquidity of funds for local small and medium-sized enterprises struggling due to high inflation, high interest rates, and economic recession,” adding, “We hope many companies will participate in and actively utilize the mutual growth payment system.”

Companies wishing to receive payments through the mutual growth payment system can claim payments after signing an agreement with Gwangju Bank according to Gwangju City’s bid announcement. Detailed information on the use of the mutual growth payment system, including agreements, payment methods, and benefits, can be obtained from the Mutual Growth Payment Call Center of the Ministry of SMEs and Startups.

This content was produced with the assistance of AI translation services.