New Thai Trade Competition Commission’s Regulation on Credit Terms applicable to SMEs

1. Introduction
Many businesses have been severely impacted by the COVID-19 pandemic. The pandemic has caused, especially, to Small and Medium Enterprises (hereinafter referred to individually as an “SME” or collectively as “SMEs”) not only the loss of customers and revenue, but also a lack of cash flow from doing business. Unlike large businesses, SMEs have a more limited cash flow, and, in B2B (business-to-business) transactions, less negotiating power. In addition, SMEs are more likely to encounter cash conversion cycle problems with customers. If SMEs cannot properly manage this problem, there is a chance that the SMEs will suffer from a lack of liquidity and eventually go out of business. One of the methods to prevent such lack of liquidity from occurring with respect to SMEs is to ensure that SMEs will not be forced to accept unreasonably long credit terms with customers. It has been found that SMEs in Thailand, particularly when it comes to B2B transactions, are, very often, subject to credit terms the length of which are the longest in the ASEAN region, and such terms have tended to increase every year, i.e., 60 days on average and 120 days in some businesses (based on the information published in 2020).

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