The Trade Credit Pledge (TCP) is a voluntary pledge. It involves big companies committing to honour payment terms to SMEs within a reasonable time-frame. This will help ensure that SMEs are able to operate without the threat of cash flow problems.
All MNCs, PLCs and GLCs are strongly urged to sign the TCP as part of their CSR initiatives.
The idea for the Trade Credit Pledge came about when a ground-breaking survey conducted by the MALAYSIA SME Media Group and INTI International University and Colleges in 2016 revealed that many SMEs are badly hit by late payments, and that this is a common practice in the Malaysian business culture.
The survey was titled “Challenges and Issues of SMEs on the Credit Terms Given to Malaysian Large Corporations.” The survey found that the decades’ old practice of withholding payments to small firms has caused many SMEs to face cash flow problems. It was found that many SMEs were enduring months without payments, simply because as small businesses, they lack a voice to demand what was owed to them.
The credit problems of these SMEs disrupted their operations and indirectly affected the supply chains of large firms too. Hence, it was felt that a Trade Credit Pledge by large firms can help SMEs directly, while ensuring the sustainability of supply chains to large companies and boosting the entire economy.
Officially launched on 25th Aug 2016 by the Minister in the Prime Minister’s Department Datuk Wee Ka Siong, TCP is spearheaded by a number of organisations. These include MALAYSIA SME, SME Association of Malaysia (SMEAM), Malaysian Air-Conditioning and Refrigeration Association (MACRA), MALAYSIAN Gift and Premium Association (MGPA), Small and Medium Enterprises Association (SAMENTA), Malaysian Entrepreneurs’ Development Association (OUMM), Hong Kong-Malaysia Business Association (HKMBA) & the International Council for SME and Entrepreneurship Malaysia (ICSMEE Malaysia)