Hello, everyone.

This is Enta.

Are you all sure your general contractors will pay you?

I think payments from most general contractors should be fine.

However, unfortunately, there are still a certain number of general contractors who are slow to pay, aren't there?

Under the "Act on the Fairness of Contract Transactions Involving Small and Medium-Sized Enterprises," which will take effect in January 2026,

Prohibition of unilateral price setting and prohibition of payment by promissory noteAmong other things, the following were decided.

Key Changes and Enhancements:

Prohibition of Unilateral Price Setting

Restrictions on Payment Methods

Payment by promissory note with a term exceeding 60 days is prohibited. Even in cases involving electronically recorded receivables or factoring, transactions where it is difficult to receive the full amount are prohibited. It is also prohibited to require small and medium-sized contractors to bear bank transfer fees.

Expansion of the Scope of Application

Additional criteria based on the number of employees have been added, and logistics transactions are now also covered.

With this bill, there is a high likelihood that things will change drastically going forward—for example, the prime contractor will be responsible for payment methods and any transfer fees incurred at the time of payment.

It looks like we'll be seeing a variety of payment methods in the future.

To be honest, there are just too many things going on for the subcontractors to make heads or tails of it.

There's factoring, corporate bonds, and all sorts of other things, but financial intermediaries get in the middle and take a cut...

I feel like we've reached a point where all I can think is, "What on earth is this???" lol

Of all those, the worst is the reserve fund.

It's actually kind of a gray area.

It’s something like withholding about 10% of the contract amount and paying it after completion, right?

For example, let's say there is a monthly turnover of 1 million yen.

That 10% will be withheld, so only 900,000 yen will be paid.

If this happens after the final inspection, what will happen in the end??

That’s how it goes, right?

However, in such cases, the contract often specifies that payment must be made entirely in cash.

That means government agencies assume payments are being made as usual, so there are no administrative directives or the like, right?

Long-term withholding of payments without just cause violates the Construction Industry Act

Unjustified long-term withholding of payment violates the Construction Industry Act. After the construction work is completed and the prime contractor has conducted its inspection and handover,

Failing to pay a portion of the subcontractor’s fees as a retention amount for an extended period without just cause constitutes,

This constitutes a violation of Article 24-3 or Article 24-5 of the Construction Industry Act.

The payment period is generally set at 50 days or less, or as short a period as possible.

Even if you agree to the hold, you must release the hold from the previous month by the second month at the latest.

These days, I don't think holding funds is acceptable anymore.

Especially for us subcontractors, we make our living through labor and machinery.

Plus, since we're running the company with a fair amount of debt, even 10% of that is a lot, isn't it?

In my experience, there was a general contractor on a project that lasted over two years who just wouldn't release the retention money the whole time, lol.

We were a third-tier subcontractor, but even though the second-tier subcontractor was receiving 100% cash from the first-tier subcontractor,

We’ll hold back 10% of the payment for the entire duration of the construction work.

Well, I guess it’s my fault for keeping quiet, but this is really not okay.

If you've received a payment like this, please let us know as soon as possible.

"This might actually be illegal, you know?" lol

Main contractors prefer payments to be made as soon as possible, don't they?

Well, if this were a major general contractor, I could still put up with it!

See you later.