The Federation of Thai Industries (FTI) is bringing back its "Faster Payment" scheme to urge large companies to speed up debt repayments in a fresh attempt to help their trading partners -- mostly small and medium-sized enterprises (SMEs) -- solve liquidity problems amid Covid-19.
Last year, the FTI launched the three-month scheme to help affected businesses reduce the payback period which usually lasts 60-120 days. "Faster Payment" encourages companies to settle their debts within 30 days after invoices are issued.
The scheme ended in December last year when Thailand was facing a second Covid-19 outbreak that flared up in Samut Sakhon, a major industrial hub.
However, the country is currently experiencing its worst Covid-19 outbreak which began in April, leading to dim prospects of Thai GDP and prompting both the state and private sector to come up with remedies for the severely inflicted economy.
The second phase of "Faster Payment" will help improve the cash flow and liquidity of SMEs, according to the FTI.
"The scheme will help SMEs, mostly FTI members, get through the pandemic," said FTI chairman Supant Mongkolsuthree.
The federation has teamed up with 163 large companies, including SCG Group, CP Group, PTT Group and Thai Beverage Group, to jointly push the scheme.
These companies trade with SMEs in their supply chains which cover some 10,000 businesses.
The FTI also plans to extend "Faster Payment" to cover companies listed on the Market for Alternative Investment (MAI) and the Stock Exchange of Thailand (SET).
Help packages for SMEs are needed because "they play a key role in pushing economic growth", said Mr Supant.
The FTI is aware that a shorter payback period may increase financial costs but Mr Supant believes large firms can deal with this issue.
Last year, Mr Supant urged businesses to adjust credit terms by cutting unnecessary processes to settle their debts rapidly. This will improve cash flow for SMEs, who are having trouble gaining access to soft loans from the government.
"Faster Payment" helped up to 20,000 businesses in 2020 which had a trade value worth 4.3 billion baht per month in the supply chain.
In a non-financial related issue, the FTI will meet the Joint Standing Committee on Commerce, Industry and Banking today to discuss the state-private effort to speed up Covid-19 vaccination.