Posco is taking the initiative to provide relief to financially ailing small and medium-size enterprises (SME). Since it is these types of companies that suffer the most during economic recessions, such as the one now plaguing South Korea, Posco has decided to pay them for goods and services provided entirely in cash.

The new policy will ease the financial burden of SMEs by allowing them to collect payment within three business days of a transaction, and its expected trickle down effect will benefit all SMEs directly involved with Posco or with Posco's goods and service suppliers.

Every year Posco spends roughly three trillion KRW (2.8 billion USD) for goods and services provided by SMEs. Under the new payment system, Posco recently paid out an estimated 700 billion KRW (663 million USD) to SMEs.

Currently, there are several large companies that have a similar cash payment system. However, whereas they settle accounts only once or twice a month, Posco computes its accounts each day and pays them twice a week. Therefore, Posco pays at least a month earlier than many other large companies.

During Chuseok (Korea's Thanksgiving Day), Posco paid 150 billion KRW (142,027,849 USD) to SMEs earlier than scheduled. The company also provided these SMEs with recommendations and proof of their business performance at Posco; items that can help them borrow more funds to enhance their products and services.

Posco and PoSteel, one of Posco's affiliates specializing in sales, have changed their sales policies to place a priority on SMEs that are having difficulties purchasing raw materials due to the recent shortage in steel supplies and to insufficient float money. As a result, Posco's imports increased to 630,000 tons for this year as opposed to its normal annual level of 27,000 tons when there is no shortage in steel material supplies. Additionally, both companies offer e-Market — an Internet auction system where SMEs can choose and purchase the steel materials they need. The number of client companies registered for e-Market is now 3,495.

Through its actions, Posco is trying to reduce the number of steel material exports by increasing the amount of steel material sales to domestic SMEs, even though international market prices are higher than domestic ones. As a stellar corporate citizen, Posco is doing all it can to aid domestic client companies by alleviating the hardships caused by an imbalance in the supply and demand of materials.