Help SMEs cope with 'life-threatening' late payments, policymakers urged

Trade credit needs to be more sustainable.

The Association of Chartered Certified Accountants today said that policymakers must do more to help small and medium enterprises (SMEs) cope with late payments.

ACCA stressed that policymakers in Singapore involved in SME financing need to rethink how they manage and regulate trade credit and late payment, especially since this could be a "life threatening" challenge for small firms.

“We need to revisit late payment habits. Policymakers can greatly improve access to trade credit and discourage late payment by improving the efficiency of the courts, and by providing arbitration and alternative redress options for businesses. These are all important objectives, but for trade credit regulation to be more widely effective, the onus cannot be solely on suppliers to report and police late payment,” said Gabriel Low, CFO (South East Asia) at GEA Westfalia Separator (S.E.A) Pte Ltd and a member of ACCA’s Global Forum for SMEs.

"What governments need to bear in mind is that late payment, in its various forms, is essentially a demand for credit. As such, their efforts need to concentrate on building a financial infrastructure that will mitigate late payment and boost trade credit through support of alternative finance and availability of credit information, for example,” Low added.