ACCA hosts a session on Ending Late Payment

This article was last updated on April 16, 2022

Canada: Oye! Times readers Get FREE $30 to spend on Amazon, Walmart…
USA: Oye! Times readers Get FREE $30 to spend on Amazon, Walmart…

Association of Chartered Certified Accountants Pakistan hosted a research and insights event in Faisalabad on “Ending Late Payment”. The session was attended by representatives from local businesses for a panel discussion moderated by ACCA Regional Head of Policy (MENASA), Arif Mirza.  The panelists included Dr Abid Ali-CFO Rafhan Maize , Imran Ghafoor- CEO Sitara Peroxide, Muhammad Zeeshan Abid -Partner Parker Randall, Suleman Zahid Jamil Chairman- Zahid Jamil & Co and Taha Hussain Director FGS.

Arif Mirza, speaking on the occasion highlighted that “circular debt is a cold example of the devastating consequences prolonged late payments can have on an economy.  Circular debt and the concurrent energy crisis plays a pivotal role in depressing the Pakistani economy, our economic growth( based upon real GDP)  is nowhere near that of our regional emerging markets.”

The CFO of Rafhan Maize gave a laudable presentation about the payment policy of Rafhan Maize as compared to the Sugar industry.  He highlighted Rafhan’s strong commitment to pay suppliers as soon as possible without any exploitation, even though a large portion of their suppliers are small farmers without any bargaining power.  The result has been spectacular, with corn production in Pakistan rising from 3000MT (metric tonnes) in 2009 to 5000MT in 2014. In contrast, the Sugar industry is notorious for late paying farmers.  Just recently, nine sugar mills were seized by the Punjab government because of large outstanding dues to farmers.

Educating the Pakistani business community about the repercussions caused by habitual late payments is perhaps the most important tool to counteract this detrimental cultural influence on corporate decision making. The government will also need to play a more active role, with stricter regulatory action against offenders who persist on willfully exploiting their suppliers.  Although some progress has been made in this field, there is still a long way to go in finding a pro-active solution.