Payment within 60 days! South Korea passed the revised bill of the "Distribution Business Act"

The Korea Fair Trade Commission (KFTC) recently announced that the amendment to the "Large-Scale Distribution Business Act " ( the " Large-Scale Distribution Business Act" ) was passed at the plenary session of the National Assembly .

The revised bill targets South Korea's large distributors, including e-commerce companies such as Coupang, and aims to protect the rights and interests of economically disadvantaged suppliers .

According to the amendment , when large-scale distribution companies such as Coupang conduct direct purchase transactions with suppliers , they must pay for the goods within 60 days from the date of receipt . The amendment will take effect six months after the date of publication .

According to existing laws in South Korea , in the case of commissioned or entrusted transactions (selling the supplier 's products under one's own name and paying the purchase price after deducting the handling fee ) or special contract purchase transactions ( distributors purchase goods on credit and can return unsold goods ) , the purchase price must be paid within 40 days from the end of the sale.

However, there are no legal provisions on "when large distributors must pay for goods if they directly purchase and sell goods from suppliers", so some suppliers often have to wait for several months to receive payment.

Now, it only takes 60 days. If distributors fail to pay for goods within the payment period, they must bear the interest on the delay, and are prohibited from using coupons or goods as collateral for payment and interest.

In the future, large distributors that violate the regulations can be ordered to pay for goods or fines, starting from the law’s entry into force. And the bill applies to cases where large distributors receive goods through direct purchase transactions after the mandatory sanctions are imposed.

"Even for direct purchase transactions without a statutory payment deadline, distributors must settle payments within 60 days, and cash flow for small and medium-sized suppliers is expected to improve significantly," the KFTC said.

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