Payment Discipline

Payment Discipline

 

the precise observance by socialist enterprises and organizations of the deadlines and procedures for meeting monetary obligations. Payment discipline helps strengthen the khozraschet (profit-and-loss accounting) system. In the USSR there is a definite sequence for payments (seeNONCASH PAYMENTS). A system of liability has been established for cases in which economic organizations and legal (juridical) persons have violated the accepted rules for settling accounts in the national economy. Thus, as stipulated in the Decree of the Council of Ministers of the USSR of Aug. 22, 1973, a penalty is paid by enterprises to the bank for submission of fictitious payment documents that cover shortfalls, for various types of tampering, or for overstatement of the volume and value of construction and erection work; it equals 7 percent of the total amount by which a sum has been overstated or otherwise distorted. In cases of violation of the conditions for the deposit of freight in safe custody, the bank collects a penalty from the enterprise of 8 percent of the value of the used commodity. For the delayed or incorrect transferring of the amount due to the enterprise, the bank, in turn, pays a penalty of 0.5 percent to the holder of the account. Where a violation of payment discipline is due to factors that do not depend upon the work of the economic organizations, a superior organization may provide additional financial aid to an enterprise.

If an enterprise is at fault in a violation of payment discipline, various types of credit restrictions and sanctions are applied in addition to penalties. When an enterprise’s payments on its bank loans have become overdue, the enterprise pays increased interest, usually 10 percent of a loan per annum. An analogous system of liability exists in the other socialist countries. For example, in the Polish People’s Republic, an enterprise pays 12 percent annually for overdue loans, in Hungary 11 to 16 percent, and in Bulgaria 10 percent. In the German Democratic Republic, enterprises pay up to 15 percent per annum for a loan for violating the conditions under which the loan was made.

O. I. LAVRUSHIN

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