COLOMBIA

On May 8, the Third Committee of Representatives voted on Bill 181/2018 which proposes making it obligatory for traders to pay their suppliers within a maximum of 60 days from receipt of goods or service fulfillment. During the Committee debate, it was decided not to vote on three of the bill’s articles and instead have them reviewed by a subcommittee, which will then present a report on the matter by May 15, the date set for the next meeting of the Third Committee where it will conclude its first debate on the bill.

In addition, the ruling coordinator of the Committee, Fabio Fernando Arroyave Rivas (Liberal Party – independent), reported that two “concerns” still remain pending. The first refers to the regulation of the terms of payment between companies similar in capacity and size. Since companies of the same size are better able to fairly negotiate their terms of payment, Arroyave sees little need for regulation in such cases, understanding that the purpose of this bill is to regulate asymmetric commercial relationships between different-sized companies, to prevent smaller companies running into liquidity problems. As such, Arroyave is in favor of removing from the draft bill the proposed regulation relating to similar-sized companies.

Meanwhile, Arroyave has requested adding a transition period between moving from the current payment system to the new one. In his speech before the Committee, he pointed out that nowadays, big companies pay within a time-frame of 87 days, and that the total amount owed by all of Colombia’s major companies is 30.268.000.000 dollars. “If this regulation [and its new payment system] were to come into effect immediately and apply to any type of company relationship, where would those 30 billion dollars come from? We will end up sparking a wave of non-compliance from those businesses in debt to smaller companies”, he said.  

The articles of the bill not approved by the Committee include the second one, a modification to incorporate exemptions concerning company size; the third, establishing a payment period of 60 days for “every trader and those that practice trading activities” without exception for equal-sized companies; and the eighth, which stipulated a one-year time-line for application without the transition phase requested by Arroyave. These articles will be discussed by a subcommittee that will have to rule on the issues before May 15th.