We study how payment protection reallocates financing within buyer-dominated supply chains. Using China’s 2020 Regulation on Securing Payments to SMEs and its 2025 revision, we estimate difference-in-differences models on quarterly data for listed Chinese firms, comparing SMEs with near-threshold non-SME firms. Both reforms reduce SMEs’ receivables burden. The initial 2020 regulation generates large and broad declines in revenue, operating profit, gross profit margins, and operating cash flow. The 2025 revision also shows real-side pressure, with lower revenue and gross margins, but the magnitude is smaller and the deterioration is less pervasive than in the 2020 episode. The adverse effects are concentrated among suppliers with high customer concentration and weak innovation-based differentiation. DiD causal forests and neural-network DiD CATE estimates recover the same dimensions as the main sources of treatment-effect heterogeneity. Payment protection improves SME suppliers’ receivables recovery, but its real effects depend on buyer power, supplier differentiation, and the maturity of the enforcement regime.