The China Association of Automobile Manufacturers (CAAM) on Monday issued new guidelines aimed at standardizing payment terms in procurement contracts between automakers and suppliers, in a bid to foster a more collaborative and sustainable industry ecosystem.

The guidelines set clear requirements for key aspects of transactions, including order confirmation, delivery and acceptance, payment and settlement, and contract duration.

For example, buyers are required to complete inspections within three working days of receiving goods. Payment terms begin once products are accepted and inspected, and the payment period must not exceed 60 calendar days.

Regarding payment methods, the guidelines encourage the use of cash payments, such as bank transfers and wire transfers, as well as bank acceptance bills. For small and medium-sized suppliers, only cash or bank acceptance bills are recommended.

The initiative is intended to support the implementation of revised regulations on ensuring payments to small and medium-sized enterprises, released by the State Council earlier this year. In June, 17 leading automakers nationwide publicly pledged to keep supplier payment periods within 60 days.

The Ministry of Industry and Information Technology voiced support for the move, saying the detailed guidelines will help ensure commitments are honored and will play an important role in advancing the healthy development of the auto sector.