Thai SMEs urge closer payment oversight under Nov 2 rules
New payment rules take effect on November 2, with SMEs facing 60–120-day waits for cash and calls for clearer penalties and stronger oversight.
- The Thai SME Confederation is demanding strict enforcement and stronger oversight of new payment-term rules to ease cash-flow pressure on small businesses facing payment delays of 60-120 days.
- A "Credit Term Plus" approach has been proposed, which includes creating wider awareness of the rules, defining clear penalties such as fines up to 10% of revenue, and strengthening supervision by the Trade Competition Commission.
- The confederation also suggests that financial institutions should help large businesses pay SMEs faster and that government procurement processes should be reformed to accelerate payments.
- The call for stricter oversight is supported by comparisons to other countries like Singapore and Taiwan, which have significantly shorter average payment periods of 34 and 45 days, respectively.
The Thai SME Confederation has called for strict enforcement of new payment-term rules that took effect on November 2, 2026, to ease cash-flow pressure on farmers and small suppliers facing lengthy waits for payment.
Sangchai Theerakulwanich, the confederation’s head of strategy, told Thansettakij that clearer penalties and stronger oversight were needed, citing payment periods of 60–120 days and figures showing that about 69% of small and medium-sized enterprises (SMEs) carry debt.
The Trade Competition Commission’s notification governs fair trade-credit practices between SMEs and large businesses or major wholesale and retail operators. Sangchai described its implementation as an important step towards addressing a longstanding imbalance between buyers and smaller suppliers.
Long payment periods squeeze working capital
Sangchai argued that SMEs often have to pay cash for purchases while allowing their customers lengthy credit periods, leaving them to finance operations while waiting for money already owed.
Suppliers carry costs throughout the supply chain, so higher sales do not necessarily translate into enough cash to keep a business running. Where formal financing falls short, businesses may turn to informal borrowing, increasing their interest burden and financial vulnerability.
The figures he cited also showed that 40% of SMEs had debts outside formal financial institutions. Among SMEs with debt, 69% had borrowed for working capital, while 28% of SMEs reported a sudden drop in income.
Sangchai linked these pressures to intense competition and limited liquidity.
Credit Term Plus targets compliance and oversight
Sangchai proposed a three-part “Credit Term Plus” approach to make the payment rules effective and establish fairer treatment of trading partners.
- Wider awareness of the rules. Large companies, SMEs, farmers, government agencies and private-sector networks should receive clear guidance on their obligations. Better communication would reduce problems caused by lack of awareness and encourage responsible business conduct. He linked fair payment practices to environmental, social and governance (ESG) principles and preparations for Thailand to join the Organisation for Economic Co-operation and Development (OECD).
- Clearly defined sanctions. Businesses that fail to comply should face fines of up to 10% of revenue in the year of an offence, he argued. The aim should be to secure compliance, with penalties available for deliberate breaches and refusal to cooperate, rather than punishment for its own sake.
- Stronger supervision. The commission should be able to obtain documents and factual reports, inspect business premises and order corrective action so that companies operate within a fair competition framework.
The 10% ceiling is already available under the Trade Competition Act for relevant unfair trade practices.
Financial support and procurement reform could speed payments
Sangchai also called for financial institutions to help large businesses and companies listed on the Stock Exchange of Thailand pay farmers and SMEs within the prescribed periods.
Digital payment systems, lower interest rates and reduced financing fees could support compliance. Connecting these mechanisms with government procurement could accelerate budget disbursement and channel funds into grassroots businesses and wider supply chains.
Public procurement procedures also needed review, he argued, particularly the time taken to inspect and accept work, settle invoices and release performance guarantees. Faster processing would reduce the financing burden on SME contractors and free working capital for their operations.
Companies with good payment records could receive awards or favourable recognition in sustainability assessments, providing another incentive for large buyers to treat suppliers fairly.
Overseas comparisons highlight shorter payment periods
Sangchai cited research by the Office of Small and Medium Enterprises Promotion (OSMEP) and the Thailand Development Research Institute (TDRI) showing that Thai credit terms commonly ranged from 60 to 120 days, and sometimes longer.
Average terms in Singapore were 34 days, compared with 45 days in Taiwan, according to the figures he cited.
He also referred to the United Kingdom’s Prompt Payment Code, overseen by the Office of the Small Business Commissioner. Under that former voluntary scheme, signatories committed to paying at least 95% of invoices from suppliers with fewer than 50 employees within 30 days. It has since been replaced by the Fair Payment Code.
India’s delayed-payment protections provide another comparison, covering qualifying micro and small enterprises dealing with buyers, including government agencies. Agreed payment periods cannot exceed 45 days from acceptance of goods or services, with late-payment interest compounded monthly at three times the Reserve Bank of India’s bank rate.
The US Prompt Payment Act also provides a model, although the 14-day and 30-day deadlines cited relate to federal construction-contract provisions. Progress payments are generally due 14 days after a proper request, while final payments are due 30 days after the later of receipt of a proper invoice or acceptance of the work.
Those construction-contract provisions also require covered payments to subcontractors and suppliers within seven days of the main contractor receiving payment, with equivalent obligations passed down the supply chain.
Shared value requires smaller suppliers to benefit
Sangchai argued that fair payment terms should form part of Creating Shared Value (CSV), allowing large businesses, SMEs and farmers to grow together under sound corporate governance.
Smaller trading partners should not be left to shoulder financing costs alone, he said. The rules taking effect were only a starting point; the priority was to turn them into practical improvements in liquidity.
Trade should rest on honesty, fair dealing and consideration for all businesses in a supply chain. Effective enforcement would help ensure the measures went beyond paperwork and strengthen confidence in the government’s ability to deliver its policies.
“The announcement strikes the right note, but it must live up to its promise,” Sangchai said.
Source: Thansettakij
