Half of all B2B credit sales in Asia are overdue, said Atradius recently when releasing its report for the 2021 Atradius Payment Practices Barometer for Asia survey.
The survey was conducted in Q2 2021 on economies including China, Hong Kong, Indonesia, Singapore, Taiwan, and the United Arab Emirates, Atradius noted.
- Around 40% of the survey respondents are pessimistic about the outlook for their Days Sales Outstanding (DSO), and 25% express concern over their liquidity levels as the pandemic continues across Asia.
- Overall, 40% of the suppliers polled in Asia reported an increase in late payment from their B2B customers over the past year, though in a region as vast and varied as Asia there are individual differences amongst the markets surveyed.
- 48% of respondents (with Indonesia the highest at 60%) indicated that they had to take corrective measures to reduce the impact of payment defaults on their business. These included delaying payment to their own suppliers (40% of respondents, with United Arab Emirates the highest at 47%). 31% of respondents (with Hong Kong the highest at 37%) needed to pursue additional external financing to pay their own creditors.
- This may explain why 25% of businesses polled in Asia (with Singapore the highest at 32%) expressed concern about maintaining adequate cash flow over the coming months.
Business confidence in Asia
However, this year’s survey results also highlight that business confidence across the region is mainly upbeat, Atradius pointed out.
This is driven by a general anticipation of a rebound of domestic economies, which in turn depends on the pace of the vaccine rollout in the individual countries to resolve the pandemic crisis, the firm said.
“Despite the overall optimistic business sentiment and anticipation of increased use of B2B credit, we don’t expect the overdue trends to recover quickly and respondents' concerns about further deterioration of DSO remain valid,” said Eric den Boogert, Atradius Managing Director for Asia.
Businesses’ credit management processes will be put to the test, and those companies that adopt a holistic and flexible credit management approach will be best positioned to navigate through this uncertain period, he noted.