Cash Payment Ratio at 90.6%
87% of Payments Settled in Less Than Half the Statutory Deadline
It has been found that 90% of the payments that large business groups in Korea make to subcontractors are in cash, and that most of these payments are settled within one month, which is half of the statutory deadline. This indicates that transparent subcontracting payment practices are becoming firmly established.
Krafton Pangyo headquarters. It is the company with the highest proportion of subcontract payment settlements within 10 days. Krafton.
On February 11, the Korea Fair Trade Commission (KFTC) announced the results of the "Inspection of Compliance with the Disclosure of Subcontract Payment Terms for the First Half of 2025," which focused on these points. The inspection covered 1,431 prime contractors affiliated with business groups subject to disclosure.
The total amount of subcontract payments made by large business groups in the first half of 2025 was tallied at 89.2 trillion won. By business group, Hyundai Motor Group paid the largest amount at 12.13 trillion won, followed by Samsung (9.58 trillion won), HD Hyundai (6.54 trillion won), Hanwha (5.22 trillion won), and LG (4.59 trillion won).
In particular, the quality of payment methods improved significantly. The average cash payment ratio was 90.6%, the highest level since the disclosure system was introduced in 2023. When including cash-equivalent payment methods such as note-substitute payment instruments, the cash-equivalent payment ratio reached as high as 98.2%. It was found that 28 business groups, including Kakao, Hanjin, and Boseong, pay 100% of their subcontract payments exclusively in cash. By contrast, DN recorded the lowest cash payment ratio at 5.84%, followed by Hankook & Company (9.83%), KG (23.36%), and Hitejinro (27.43%).
The speed of payment was also fast. Of all subcontract payments, 66.98% were made within 15 days, and payments made within 30 days reached 87.07%. In effect, most prime contractors are settling payments within a period that is less than half of the statutory payment deadline of 60 days. In particular, six business groups, including Krafton (82.67%), LG (82.05%), and Korea Aerospace Industries (78.12%), showed a payment pattern in which more than 70% of the amounts were paid promptly within 10 days.
On the other hand, the proportion of payments delayed beyond 60 days was calculated at 0.11% (99.3 billion won). Business groups with a high ratio of payments made after 60 days were E-Land (8.84%), Daebang Construction (4.09%), SM (3.2%), Hankook & Company Group (2.05%), and Shinyoung (2.02%), in that order.
In this inspection, the KFTC imposed fines on three companies that failed to disclose, including Creation Music Rise under Kakao, and on three companies that disclosed late, for violating disclosure obligations. It also guided 47 businesses in which simple omissions or typographical errors were found to file corrected disclosures.
A KFTC official said, "Through the disclosure system, small and medium-sized partner companies can compare the payment soundness of prime contractors and use this information in negotiations," adding, "We will continue to closely monitor unfair practices related to subcontract payments and encourage voluntary improvements in payment terms."
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