82.1% of Mid-sized Companies Say "Grace Period for Delivery Payment Linkage System Should Be Extended"

Junggyeonryeon Announces Results of Survey on Mid-sized Companies' Opinions Regarding Implementation of Payment Price Linkage System

82.1% of mid-sized companies expressed the opinion that the grace period for the delivery payment linkage system, which ends at the end of this year, should be extended. The Korea Federation of Mid-sized Enterprises announced on the 29th the results of a survey on the opinions of mid-sized companies regarding the implementation of the delivery (subcontract) payment linkage system, including this content. Although the three-month grace period will end and the linkage system is scheduled to be fully implemented from January 1, 2024, 64.9% of mid-sized companies explained that they have not yet completed preparations to respond to the linkage system. This survey was conducted from December 4 to 13 targeting 151 mid-sized companies engaged in consignment and entrusted transactions.

Mid-sized company representatives cited reasons for insufficient preparation for the linkage system as 'lack of time' (49.0%), 'lack of awareness among partners' (21.4%), 'lack of internal personnel and budget' (15.3%), and 'ambiguous and unclear laws and regulations' (8.2%). A representative from the Korea Federation of Mid-sized Enterprises stated, "Mid-sized companies are experiencing double burdens as both entrusted and entrusting companies under the linkage system," adding, "Given the numerous transactions with many companies, mid-sized companies must conclude hundreds of linkage agreements depending on contract periods and contents, so the three-month grace period is too short for them to complete all preparations."

Regarding the appropriate extension period for the grace period, 72.6% of companies responded 'more than one year.' 'More than six months' accounted for 20.2%, and 'more than two years' was 6.5%. Mid-sized company representatives cited the biggest difficulty in implementing the linkage system as 'uniform regulations that do not reflect existing transaction practices' (46.4%). This was followed by 'excessive obligations and penalties for entrusting companies' (17.9%), 'lack of information on concluding and fulfilling linkage agreements' (12.6%), 'excessive administrative work and costs' (6.0%), and 'conflicts and disputes between companies' (6.0%).

Additionally, 74.2% of mid-sized companies stated that 'follow-up legislative amendments related to the linkage system are necessary.' They identified urgent items for improvement such as 'easing the level of penalties and sanctions' (37.5%), 'establishing provisions to prevent partner misconduct' (20.5%), 'introducing regulations to facilitate smooth provision of cost information' (14.3%), and 'expanding the scope of small and short-term contracts' (11.6%). 10.7% of mid-sized companies urged a 'reconsideration of the linkage system.'

Mid-sized company representatives responded that to ensure the system’s establishment on the ground and enhance its effectiveness, government support should be strengthened through 'expanding incentives such as financial and tax support' (45.7%), 'providing detailed guidelines and casebooks by industry and sector' (21.2%), and 'expanding information provision on raw material prices' (19.2%).

Lee Hojun, Executive Vice Chairman of the Korea Federation of Mid-sized Enterprises, emphasized, "Since many mid-sized companies are facing significant difficulties due to uniform regulations that do not carefully consider the unique characteristics of transactions by industry and sector, it is urgent to prepare supplementary measures such as allowing an additional grace period even after the current grace period ends at the end of this year." He added, "To fully achieve the purpose of the system by encouraging voluntary participation of companies, it is necessary to expand companies’ access to information, such as providing major raw material price indicators, and to expedite the establishment of a support system with sufficient budget and professional personnel before the full implementation."

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