Atradius has conducted the latest 2017 payment barometers report which focuses on the B2B receivables payment trends and challenges that businesses are facing.

The scope of this research covers companies from eight countries (Australia, China, Hong Kong, India, Indonesia, Japan, Singapore and Taiwan) who have been surveyed.  A net of 1,707 interviews were conducted, approximately 200 interviews per country.

 

Summary of Key Findings

Based on the survey, businesses in APAC are expecting a slight deterioration in the B2B payment in the next 12 months.  Other key findings on receivables payment trend are:

 

Sales on credit terms

Credit sales in Asia pacific averaging 45.9% continue to account for a higher proportion of B2B sales than that seen in Europe (40.0%) and in the Americas (45.5%). Respondents in Asia Pacific are more likely to sell on credit to domestic B2B customers (49.5%) than to foreign B2B customers (42.2%).

B2B credit sales APAC

 

Overdue B2B invoices (%)

  • 89.6% of respondents in Asia Pacific reported late payments from their domestic B2B customers, an increase from the previous year which was reported at 88.3%.
  • 44.6% of domestic remained outstanding on the due date
  • The average frequency of late payments was the highest in China (domestic 93.9%, foreign 96.0%) and the lowest in Japan (domestic 67.3%, foreign 74.7%).
  • The percentage of overdue B2B invoices in Asia Pacific (45.4%) is lower than that registered in the Americas (48.8%), but slightly higher than that in Europe (41.1%)
  • Construction and consumer durables sectors were reported to experience  the longer payment delays, with an average of 31 and 33 days respectively.

B2B sales on credit in APAC

 

Payment duration (average days)

  • The average payment terms in Asia Pacific averaged 30 days (2016: 33 day).
  • The average payment term for domestic B2B customers was 45 days (2016: 45 days)
  • The average payment term for foreign B2B customers was 42 days (2016: 43 days)
  • Australia saw an increase in domestic payment delays
  • Australia has the shortest average invoices to cash turnaround of 44 days

 

Key payment delay factors

Insufficient availability of funds remains as the most often quoted reason for payment delays in the Asia Pacific region (38.6% in 2017 vs. 40.2% in 2016) for both domestic and overseas customers.  Second reason is the complexity of the payment procedure (27.4%).

 

Protection of business profitability

Due to the Brexit event and the slowdown in Asia and US protectionism, 30.3% of respondents in Asia Pacific plan to do more to protect their businesses by increasing credit management.  39.8% of respondent do not intend to make any changes.

The respondents most preferred two credit management tools are checks on buyers’ creditworthiness (reported by an average of 36.1%) and monitoring buyers’ credit risk (34.0%). These were also the two most preferred credit management tools in the Americas and Europe.

 

Uncollectable receivables

2.1% of B2B receivables were reported to be uncollectable.  India reported the highest proportion of uncollectable receivables of 2.6%. The lowest in Asia Pacific is Australia at 1.6%.

The reason of uncollectable was mainly due to:

  • 47.4% – customer went bankrupt or out of business
  • 36.2% – written off due to old age of the debt
  • 35.4% – unable to locate the customer

reason for uncollectable invoices debt

Reference

Atradius Payment Practices Barometer, International survey of B2B payment behaviour Asia Pacific – key survey results, October 2017, Link