- Average supplier payment cycle at major Chinese carmakers shortened to about 54 days, down ~10 days year-on-year.
- Four automakers now pay suppliers in under 50 days while 15 rely exclusively on cash or bank drafts.
- Implementation gaps remain as firms use inconsistent payment start points and some delay actual receipt despite 60-day nominal terms.
Most automakers have since adjusted payment terms, while some suppliers report effective delays despite nominal 60-day terms.
On Feb 12, the China Association of Automobile Manufacturers (CAAM) released a survey report on the implementation of payment-term commitments by major automakers to their suppliers.
The survey shows that the vast majority of key carmakers have compressed supplier payment terms to within 60 days, with the average payment cycle reduced to around 54 days, about 10 days shorter year on year. Four companies reported average payment periods of less than 50 days.
In terms of payment methods, 15 companies rely exclusively on cash or bank acceptance drafts. A small number use commercial acceptance drafts.
Two companies have adopted electronic accounts payable vouchers but pledged to phase them out.
Five companies reported cash payment ratios exceeding 50%, while two reported cash settlement ratios above 70%.
Regarding preferential treatment for small and medium-sized enterprises (SMEs), 17 key automakers calculate payment terms from the date of goods delivery and acceptance, ensuring that the full process from acceptance to payment does not exceed 60 days.
On top of this, 14 companies have introduced additional supportive measures. Two companies provide 100% cash payment to SME suppliers. Five companies allow financially constrained SME suppliers to apply for early payment.
The latest round of payment-term compression follows the State Council’s revision in June last year of the Regulation on Ensuring Payments to Small and Medium-Sized Enterprises.
Subsequently, 17 major carmakers publicly pledged that payment periods would not exceed 60 days.
In September last year, CAAM issued the Initiative on Standardizing Supplier Payment Practices for Vehicle Manufacturers, urging companies to establish supporting internal systems.
Most companies have since adjusted payment terms, including those in existing contracts.
However, the survey also identified outstanding issues. Some companies apply inconsistent definitions for the starting point of payment terms, including goods delivery and acceptance, centralized reconciliation, invoice receipt, or vehicle loading verification.
Although payment terms are nominally set at 60 days, the actual time from supplier delivery to receipt of funds varies significantly.
In some cases, process management remains non-standardized. A few companies have reportedly requested price reductions or additional contractual concessions from suppliers on the grounds of shortening payment terms.
CAAM said it will continue to monitor the implementation of payment-term commitments and urge companies to ensure standardized compliance.
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