Effective July 1, 2026, China caps the maturity of electronic IOUs (commercial bills / supply-chain payment instruments) at six months, barring large corporates and government bodies from using them to disguise stretched payment terms to small and midsize suppliers. To clear existing arrears, Beijing also allocated 200 billion yuan (about $28 billion) from its 2025 special-purpose bond quota. The move targets a cash squeeze that cascades from indebted local government financing vehicles down through supply chains.
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China caps electronic IOU maturity at 6 months to stop late payments to SMEs
Why this matters for founders
A founder supplying larger firms or state entities can now insist any electronic IOU settles within six months, shortening receivable cycles and tightening cash flow. Review supplier contracts and payment terms signed after July 1 to enforce the new cap and flag any instrument exceeding it.
Source: Caixin Global
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