The push to shorten payment cycles has reached the battery supply chain, with a new industry proposal aiming to standardize and expedite supplier payments.
A joint initiative released by the China Automotive Power Battery Industry Innovation Alliance and the Zhongguancun Energy Storage Industry Technology Alliance proposes capping payment terms for small and medium-sized suppliers at a maximum of 60 calendar days.
The "Initiative for Payment Standards for Suppliers of Power and Energy Storage Battery Enterprises" focuses on addressing payment pain points across the industry's value chain, aiming to standardize the entire process from transaction and acceptance to final payment between battery firms and their suppliers.
Key industry players, including Contemporary Amperex Technology Co.,Ltd. (CATL), Eve Energy Co.,Ltd., BYD's Byd Company Limited subsidiary FinDreams Power, Sunwoda Power, and CALB, have publicly stated they will actively respond to the initiative to uphold the industry's healthy development.
Core Principles of the Initiative
The proposal is grounded in principles of equality, voluntariness, fairness, and good faith. It explicitly calls on battery and system integration companies not to leverage their dominant market position to infringe upon the legitimate rights and interests of their suppliers, promoting a compliant settlement mechanism to drive high-quality and sustainable industry growth.
The initiative sets out self-regulatory standards for multiple stages of the procurement process.
For order placement and amendments, it mandates clear rights and responsibilities in formal contracts, with compensation required for unilateral breaches. It stipulates that any changes, suspensions, or cancellations of orders must be mutually agreed upon.
Regarding delivery and acceptance, the initiative emphasizes shortening acceptance cycles to prevent payment delays. It recommends that acceptance for materials and components be completed within seven working days of receipt. For equipment and testing services, clear maximum acceptance timeframes should be contractually defined.
Focus on Payment Terms
The most critical stipulation centers on payment, setting a 60-day maximum payment term for small and medium-sized enterprise (SME) suppliers and advocating for cash payments as the primary method.
For SME suppliers, the payment term is to be calculated from the date of goods delivery or acceptance, not exceeding 60 calendar days, with payments deferred to the next business day if the due date falls on a holiday. The use of bank transfers or telegraphic transfers is encouraged.
For non-SME suppliers, the initiative proposes a monthly centralized reconciliation mechanism, with the payment term starting from the reconciliation date. While cash settlement is preferred, the use of bank acceptance drafts must be clearly stipulated in contracts, and the proportion of commercial acceptance drafts and electronic payment vouchers should be gradually reduced.
The proposal also encourages long-term, stable partnerships across the supply chain through framework agreements to mitigate volatility risks and ensure stable supply.
Regulatory Support and Industry Response
A relevant official from the Ministry of Industry and Information Technology's First Department of Equipment Industry expressed support for the initiative, describing it as a significant measure to implement regulations on safeguarding payments to SMEs.
The official noted that while China's power and energy storage battery industry has expanded rapidly, the supply chain's collaborative mechanisms remain underdeveloped. Prolonged payment cycles for suppliers exacerbate their financial strain, weaken their R&D investment capacity, and ultimately hinder the industry's long-term development.
Shortening payment terms is seen as both a practical need to alleviate supplier pressure and a necessary step for companies to improve internal governance. The official stated that 11 key battery enterprises have actively responded to the initiative.
CATL stated it firmly supports the initiative's spirit and will work with industry partners to build a credible, compliant, and mutually beneficial ecosystem, acknowledging that a healthy supply chain is fundamental to high-quality development.
Eve Energy Co.,Ltd. pledged to continuously optimize its supply chain payment management to maintain a healthy market order.
FinDreams Power, under Byd Company Limited, committed to focusing on key areas like order confirmation and payment settlement, driving industry advancement through technological and management innovation alongside its partners.
Sunwoda Power promised to implement the initiative's requirements in critical operational areas to safeguard supplier rights and enhance supply chain resilience.
CALB also affirmed its commitment to actively implementing the initiative's requirements and consistently protecting supplier rights to foster a win-win industrial ecosystem.
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