President Piñera announces measures to speed up payments between companies, with a focus on SMEs
The President noted that these measures will directly impact financing costs for small- and medium-sized enterprises and that reducing payment periods by 20 days would mean financial relief of more than US$80 million.
The President of Chile, Sebastián Piñera, has announced a series of instructions on the bill on Timely Payments. These modifications are designed to improve relationships between companies — primarily SMEs — and their suppliers, giving them greater certainty, thereby increasing the level of investment and thus impacting growth in Chile.
“We are going to reduce invoice payment periods to a 60-day maximum. From the 60th day - or earlier if agreed between the two parties - and regardless of the type of company or sector, interest will begin to accrue in favor of the business that sold the good or service,” emphasized the President. Given the tight fiscal position inherited by the Government, the public sector will have a period of three years to adjust to this law.
The President also explained that effective application of the new regulations requires other modifications, including the following:
- Mandatory issuance of electronic delivery waybills.
- Restricting changes to the original invoice amounts after purchaser acceptance. In order to lend certainty to the invoice deadline and amount, credit notes will not be issued later than eight days after the invoice is accepted. Other compensation mechanisms will be identified.
- As of an agreed upon payment deadline, not to exceed 60 days, the invoice will begin accruing interest that will be added to the amount owed by the company that bought the good or service.
- Tax credit for IVA (VAT) will only be applicable after an invoice is paid.
- Company payment behavior will be made public, enabling people to recognize those who pay in a timely manner.
- The conditions for earning the ProPyme (Pro-SME) seal will be modified.
President Piñera highlighted that this bill has two major advantages. First, it improves relationships between companies and their suppliers by establishing more symmetrical conditions and eliminating a current source of friction. Second, it impacts financing costs for small- and medium-sized enterprises. “According to our calculations, reducing payment periods by 20 days would bring more than US$80 million in financial relief for small- and medium-sized enterprises,” said the President.
Finally, he promised, “our administration will do everything necessary and possible — we have to be responsible — to help Chile recover its lost leadership and dynamism so that we can get back on track to real progress and development and take quick, steady steps toward making Chile a developed country free from poverty.”
In that spirit, he urged the Chilean people to rebuild trust by not just preaching, but by also practicing unity.