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Nearly eight out of ten small business partners are experiencing severe operational distress as corporate rehabilitation proceedings at Homeplus have triggered prolonged delays in supply payment settlements.

The Korea Federation of Small and Medium Business (KBIZ) released the results of its "Survey on Settlement Delays Among Homeplus Suppliers" on June 23, polling 150 small business vendors. According to the findings, a staggering 76.7% of the respondents stated that they are facing operational difficulties due to the delayed payments.

The average unpaid balance per vendor was tallied at 774 million won. Notably, 40.7% of the surveyed firms have over 500 million won tied up in unpaid invoices, while 24.0% have suffered financial damages exceeding 1 billion won. Compounding the crisis, 98.0% of the respondents reported that settlements have been overdue for more than 60 days from the date of delivery, indicating that their cash flows have effectively dried up.

Consequently, these small businesses are confronting a domino effect of operational failures. A multi-response question revealed that 85.3% are struggling to settle raw material and subcontracting payments, while 65.3% are suffering from a shortage of funds for new product development and general operations. The fallout is spreading across all areas of business, including delayed payrolls leading to employee departures (24.7%) and mounting burdens to repay financial institution loans (10.0%).

The most urgent relief measure demanded by the impacted firms is the provision of financial assistance or priority settlements collateralized by the proceeds from the sale of Homeplus Express (95.3%). This was followed by calls for government emergency management stabilization funds (44.0%) and the mandatory third-party escrow of supply payments (39.3%).

"The protracted situation has pushed small businesses into an unforeseen liquidity crisis," said Kim Hee-jung, Executive Director of the Economic Policy Division at KBIZ. "The normalization of Homeplus will only be viable once the survival of its small business suppliers is guaranteed." He added, "The survival of these small partner firms, who bear no responsibility for Homeplus's management crisis, must be prioritized above all else."

                                                                                                               Oh Se-eun