China orders SOEs to pay small suppliers in cash to avoid payment delays

China is ordering state-owned enterprises (SOEs) and government procurement projects to pay small suppliers in cash, reports Caixin. The policy is aimed at stepping up a campaign against chronic payment delays that have strained businesses.

The State Council on Thursday issued new rules aimed at tightening oversight of large companies’ payment practices and preventing them from using commercial bills and electronic receivables certificates to delay payments to small and midsize enterprises.

The measures come as unpaid corporate bills continue to mount despite earlier government efforts to clear arrears. Receivables at China’s large industrial companies reached RMB 28.9 trillion ($4.3 trillion) at the end of July, up 8.5% from a year earlier, according to the National Bureau of Statistics. The average collection period rose to 71.9 days, nearly one day longer than a year earlier.