Limit raised from 500 million to 1 billion won, speeding up payments to SMEs
Small and medium-sized enterprises supplying goods to public institutions will receive faster payments after the government doubled the cap on an advance payment program.
The Public Procurement Service announced Wednesday it would raise the ceiling on its advance payment system — under which the agency pays suppliers on behalf of public institutions before collecting reimbursement — from 500 million won ($328,000) to 1 billion won, effective immediately.
The move is aimed at helping small and medium-sized enterprises secure liquidity by accelerating payments for government-supplied materials. The agency revised its official notice on eligible goods for the advance payment program, with the changes taking effect Wednesday.
Under the expanded system, the agency will use its own revolving fund to pay small and medium-sized enterprises holding lump-sum contracts of up to 1 billion won before collecting from the contracting public institution. The change will cut the time suppliers wait to receive payment from five days to within four hours.
The agency said no additional government budget would be required to support the expanded cap. Instead, it will draw flexibly on its existing 1.5 trillion won revolving fund — a special fund held outside the regular revenue-and-expenditure budget to support efficient procurement operations.
"Prompt payment of supply proceeds is directly tied to the stable management of a business," said Lee Hyeong-sik, the agency's planning and coordination officer. "We hope this measure will ease the burden on small and medium-sized enterprises struggling with liquidity, and we will continue working actively to improve systems that support them."
kwonhl@heraldcorp.com
