The rectification of accounts payable in the complete vehicle industry chain is now extending to the battery segment.
On June 29, the China Automotive Power Battery Innovation Alliance and the Zhongguancun Energy Storage Industry Technology Alliance jointly released an initiative titled "Initiative on Standardizing the Payment of Accounts Payable to Suppliers of Power and Energy Storage Battery Enterprises." This initiative directly targets long-standing industry issues such as excessively long payment terms, delayed acceptance, abuse of commercial acceptance bills, and the long-term occupation of funds for small and medium-sized suppliers. It also proposes unified standards around order signing, goods acceptance, reconciliation and settlement, and payment time limits.
On the day of the release, 11 leading battery companies, including CATL (Contemporary Amperex Technology Co., Limited), FinDreams Battery, CALB (China Aviation Lithium Battery), EVE Energy, and Sunwoda EVB, expressed their support, committing that the maximum payment term for small and medium-sized suppliers will not exceed 60 days.
As the news spread, reactions across the upstream and downstream of the industry chain varied. Many small and medium-sized suppliers breathed a sigh of relief, but they also clearly understood: whether the 60-day payment term can truly be implemented does not entirely depend on the battery companies themselves. The reason lies in the long-standing top-down capital transmission chain in the lithium battery industry chain.
An industry insider used an analogy: "It's like a rope; if one end is loose, the whole rope cannot be pulled tight; only when every link is tightened can the rope be pulled straight."
How Did This Become the Industry's "Default Setting"?
The rapid response to this initiative indicates that the problem has accumulated to a severe extent.
Data from the 2025 annual reports of 31 listed companies in the Shenwan lithium battery sector, compiled by Wind, shows that the industry's average days payable outstanding (DPO) is 97.3 days. There is significant divergence among related enterprises, with this indicator exceeding 204 days at the highest and only 12 days at the lowest—a difference of nearly 20 times.
If the scope is narrowed down to leading power battery companies, the characteristic of prolonged payment terms becomes more prominent. Gasgoo Automotive Research Institute compiled data from 7 mainstream listed power battery companies. In 2025, the average days sales outstanding (DSO) for these enterprises was about 92 days, while the average DPO reached 159 days. If the term of notes payable is included, the period would be even longer.
Among them, some battery companies such as CATL and Gotion High-Tech had a DPO of over 180 days in 2025. However, CATL's DSO was less than 60 days, while Gotion High-Tech's was around 130 days. Conversely, although Farasis Energy did not achieve profitability in 2025, both its DSO and DPO were relatively short.
The ensuing question is: why do battery companies generally extend their payment terms so long?
Industry insiders analyze that this cannot be simply attributed to battery companies transmitting pressure to downstream suppliers. The deeper reason is the top-down capital transmission mechanism in the industry chain. Slow collections from complete vehicle manufacturers lead to tight cash flow for battery companies, and the financial pressure can only be pushed further upstream to suppliers. In other words, this is not an operational choice of a single enterprise; it is the operating mode of the entire chain that determines who gets paid first and who gets paid last.
A researcher from a certain automaker explicitly stated, "Before battery companies can demand money from others, they must first see if the automakers can deliver." Because complete vehicle manufacturers are often the link with the strongest bargaining power in the chain, if they are slow, all subsequent links must follow suit. Battery companies are caught in the middle, squeezed by automakers above and material suppliers below, making it uncomfortable on both ends.
Therefore, the extension of payment term governance from complete vehicles to batteries is not two independent events, but the first and second halves of the same story. If any link in the chain is loose, the other links cannot be tightened.
Besides the payment terms written in the contract, there are many "invisible extension" tactics in execution. Combining information from multiple sources, some companies sign fixed payment terms in their contracts, but issues such as delayed acceptance, buck-passing on reconciliation nodes, and order changes lead to actual collection times far exceeding the paper agreements.
Commercial bills are another thread. Commercial acceptance bills were originally normal payment tools, but during the industry's rapid expansion, many companies used them as a means to delay payments. Suppliers wait for months after delivery to receive commercial bills, and then wait another few months for the bills to be cashed. Need cash urgently? Sure, discount them early, but the company might have to absorb an additional financing cost.
Reports indicate that commercial acceptance bills have long been used to disguisedly extend the collection cycle of the lithium battery supply chain. If upstream small and medium-sized suppliers need urgent cash flow and choose to discount bills, they will incur additional financing expenses. Coupled with the hidden costs of long-term capital occupation, overall profitability is continuously eroded. This is also the core reason why this industry initiative explicitly requires reducing the proportion of commercial bills and promoting cash settlements.
If methods like commercial bills prevail, large enterprises can withstand it in the short term, but small and medium-sized suppliers may not be able to bear it. Facing the delayed return of payments and rising financing costs, companies are forced to compress investments in R&D and technological transformation. This continuous tightening of the capital front will ultimately transmit to the entire industry, inhibiting innovation capabilities and the pace of technological iteration.
Relevant officials from the Ministry of Industry and Information Technology (MIIT) also stated that the imbalance in payment terms not only affects the operations of small and medium-sized enterprises but also weakens collaborative innovation between upstream and downstream, amplifying supply chain risks during the industry's adjustment cycle. In the past two years, the lithium battery industry experienced a cyclical adjustment. Many upstream companies reduced or even halted production due to tight capital chains, directly affecting downstream delivery schedules.
The situation in the energy storage market is similar. Most small and medium-sized integrators cannot meet the signing threshold of battery factories and can only procure goods through multi-level distributors. Layer-by-layer circulation increases procurement costs and also causes mismatches in payment terms and capital occupation.
In comparison, the comprehensive cost of energy storage channels is significantly higher than that of power battery supporting channels. The core of this cost gap stems from differences in capital occupation. Commercial and industrial energy storage projects require large investments and have long collection cycles. Long-term advance funding generates high financial costs, coupled with continuous operations and maintenance (O&M) expenditures that raise the overall channel overhead. In contrast, power batteries, facing standardized batch supply to automakers, although also incurring basic channel and payment term costs, do not face long-term large-scale advance funding pressures, resulting in relatively lower channel additional costs.
As problems stack up layer by layer, it is no longer just a matter of "a certain company paying slowly," but rather that the capital circulation mode of the entire chain urgently needs improvement. The push for the initiative by the two alliances and the concentrated response from 11 leading battery companies aim to fundamentally reshape the capital circulation mode of the entire chain.
Dong Jing, an analyst at Gasgoo Automotive Research Institute, believes that the biggest breakthrough of this initiative lies in moving payment term constraints from "paper" to "full-process rigid calibration."
On the one hand, it clearly defines the date of delivery or successful acceptance as the starting point for payment terms, and compresses the acceptance time limit to within 7 working days, blocking the gray area of disguised delayed payments in the acceptance process from the source. On the other hand, the design of reducing commercial bills and encouraging cash settlements aims to end the dual capital occupation caused by "paper payment terms + bill extensions," making the 60-day cap a real, implementable cycle.
Why Are They Willing to Hit the Brakes?
Regarding the shortening of payment terms, different battery companies have different feelings.
Leading companies like CATL and FinDreams Battery have a solid financial foundation. The 2025 annual report shows that CATL's cash and cash equivalents at the end of the year approached 300 billion RMB, with a net cash flow from operating activities of 133.2 billion RMB for the year, and an asset-liability ratio of 62% that continues to be optimized.
Relying on BYD's internal supporting closed-loop for complete vehicles, FinDreams Battery has a low DSO and obvious internal capital synergy advantages, with almost no pressure from large-scale advance funding. For these two companies, shortening payment terms is somewhat pressuring, but far from being a fatal blow.
Second-tier battery companies are not so relaxed. Companies like Gotion High-Tech, EVE Energy, and CALB generally faced high asset-liability ratios and large-scale interest-bearing debts in 2025. For instance, Gotion High-Tech's asset-liability ratio exceeded 71% last year, and its cash on hand could not cover short-term interest-bearing debts. Moreover, the DSO for second-tier manufacturers is generally over 80 days. Once payment terms are compressed, their financial pressure will be much greater than that of leading enterprises.
During the downturn of the lithium battery cycle in 2025, multiple related companies delayed project implementation due to tight capital chains. Looking at the energy storage field, Tianyancha data shows that as of March 2026, in just five years, as many as 63,000 energy storage companies were in abnormal status (including deregistration and revocation).
The capital constraints brought by payment term governance will also accelerate the clearance of backward production capacity in the industry, driving orders and capital to concentrate in leading enterprises. However, actively breaking the long-used model of interest-free capital occupation is not easy for anyone.
During the past stage of rapid expansion, extending payment terms and issuing large-scale commercial bills were common low-cost financing methods for battery manufacturers. Relying on ultra-long payment terms to occupy upstream funds, companies could hedge against large cash expenditures for raw material stocking, new production line construction, and inventory hoarding without additional borrowing.
Now that the time limit for performance payments has been rigidly compressed and the use of commercial bills is restricted, the pace of cash outflows has significantly advanced. Procurement payments that could previously be paid in installments and delayed must now be settled within 60 days; payments that relied on bill extensions must now be paid in cash. The original extensive capital scheduling logic of enterprises may no longer be sufficient.
Greater uncertainty lies downstream. The underlying contradiction in capital transmission in the industry chain has not disappeared: the speed of collections from complete vehicles determines the upper limit of cash inflows for battery companies. If the payment rhythm in the complete vehicle segment does not improve synchronously, battery companies in the middle unilaterally shortening payment terms means they must independently bear the cash flow gap formed by the dual mismatch between upstream and downstream. This is not something a single company can cover.
Then why still do it? The core reason is: supply chain stability is more critical than before.
The industry development logic has changed. In the early expansion stage, companies competed on production capacity scale and single-product cost. But now, industry chain collaboration, stable supply, and joint R&D are becoming core competitive chips. High-quality upstream suppliers are not just sellers; they are joint R&D partners for battery companies to implement new materials and new processes.
Relying on ultra-long payment terms to occupy supplier funds in the long term can alleviate short-term pressure but consumes upstream R&D and expansion capabilities in the long run. Once entering a cycle of raw material shortage, companies with poor payment conditions will have their supply priority lowered by suppliers, or even face tilted capacity allocation.
Shortening payment terms is essentially exchanging stable cash cooperation for upstream priority supply rights and customized technical support. This is a long-term investment regarding supply chain security.
Another change comes from internal enterprise management. In the past, the model of ultra-long payment terms and a large number of commercial bills running in parallel involved multiple businesses such as reconciling with suppliers, verifying bills, and coordinating payment cycles, consuming significant labor costs. If enterprises unify a 7-working-day acceptance and 60-day cash settlement, the full-process payment nodes will become standardized, and disputes over accounts and bills are expected to decrease.
Looking at the longer term, this payment term rectification is a node for the power battery industry shifting from extensive scale expansion to refined operations. Future industry competition will no longer just compare the speed of capacity expansion and manufacturing costs; supply chain governance capabilities and full-chain capital synergy efficiency will become important parts of enterprise differentiated competitiveness. Actively adapting to new payment rules is also a necessary path for leading enterprises to consolidate long-term advantages.
Payment Terms Have Changed, and the Rules of the Game for the Entire Chain Must Follow
What the initiative changes are the payment rules, and what is subsequently affected is the business logic of the entire industry chain.
The most direct change is upstream. For material and equipment companies, improved accounts receivable turnover efficiency and faster capital return can reduce short-term financing and allocate more resources to R&D, process upgrades, and capacity optimization. An equipment company calculated that if the collection cycle is shortened by 30 days, it can save millions or even tens of millions in financial expenses annually, and this money can be completely used for the R&D of next-generation equipment.
For many SRDI (Specialized, Refined, Differential, and Innovative) enterprises, the significance of improvement is not just "the money is back." When companies do not need to rely on continuous financing to maintain operations, they have more energy to participate in long-term R&D and are more willing to engage in joint development and deep cooperation with downstream players. As industry chain collaboration capabilities improve, the innovation efficiency of the entire industry will also rise. The industrialization progress of new technologies such as sodium-ion batteries and solid-state batteries may also benefit from this.
The energy storage market will also feel the changes. In the past, small and medium-sized integrators could not meet the signing threshold of battery factories and could only rely on multi-level distributors to get goods, with layer-by-layer advance funding and markups, leading to high channel costs. After payment rules are gradually standardized, upstream capital occupation decreases, and the space for channels to make money through payment terms and capital arbitrage naturally narrows.
After payment rules are gradually standardized, upstream capital occupation decreases, and the space for channels to make money through payment terms and capital arbitrage is also narrowing. This does not mean intermediaries have no value, but their source of value must change. It is becoming increasingly difficult to "make a living" relying on information asymmetry and capital advantages; capabilities such as solution design, project implementation, installation and debugging, and O&M services will become increasingly important.
The focus of competition for integrators will also shift to "whether they can do the project well." Enterprises will transform their business thinking, shifting from spending most of their energy on sourcing and price comparison to spending time researching user needs and optimizing solution designs.
From an overall industry perspective, this is a positive. In the past, some companies gained capital advantages through ultra-long payment terms and bill settlements, creating a certain degree of disorderly competition. After capital rules are gradually unified, competition will return to core capabilities such as product quality, technological innovation, and customer service.
Of course, payment term governance cannot yield immediate results. The capital transmission chain among complete vehicles, batteries, and materials is long, and the operating conditions and bargaining power of enterprises in each link vary greatly, so the execution rhythm will inevitably be fast or slow.
Dong Jing believes that in the long run, a unified payment term benchmark will help break the long-standing "prisoner's dilemma of delayed payments" in the industry chain, promote the acceleration of capital turnover across the entire chain, and point towards a healthier virtuous cycle; however, short-term gaming still exists. Second- and third-tier battery companies have weak bargaining power and are easily squeezed by both complete vehicles and upstream ends.
More importantly, the current initiative belongs to industry soft constraints. It cannot be ruled out that some companies will maintain the original level of capital occupation in disguised forms outside the payment terms by adjusting the proportion of quality assurance deposits or replacing them with other types of bill tools.
This reminder highlights the complexity of the problem. But changes are gradually transmitting along the industry chain. For upstream material suppliers, a more standardized settlement mechanism can directly alleviate capital occupation pressure, allowing them to have the resources to invest in R&D and technological transformation; for battery companies, it requires shifting from relying on payment term expansion to more refined cash flow and supply chain balance management; for complete vehicle companies, this means re-examining the cooperation logic with suppliers.
This adjustment may not immediately change the industry landscape, but it is promoting the gradual improvement of capital turnover efficiency in the industry chain, and the focus of competition will also gradually return to "who does it better." The deeper significance lies in the establishment of a more transparent set of cooperation rules, which is to return transactions to fairness and competition to the products, technology, and collaboration capabilities themselves.