Customers’ late payments plague 90% of APAC suppliers

Increased delays forcing firms to correct their cash flows, says trade credit insurer

Customers’ late payments plague 90% of APAC suppliers

Insurance News

By Gabriel Olano

Nine out of ten business suppliers in the Asia-Pacific region have experienced late payment of invoices from their customers over the past year, forcing a third of these suppliers to take measures to correct their cash flow, according to a survey by trade credit insurer Atradius.

On average, 45.4% of the total value of business-to-business invoices were unpaid as of due date. Among domestic transactions, the most common reason for delayed payment was insufficient availability of funds, according to 43.8% of respondents. However, for foreign transactions, complexity of the payment procedure was cited as the most common reason for late payment.

The study also showed that more suppliers in the region are showing concern over an increase in days sales outstanding (DSO), or the average number of days it takes for a firm to collect revenue after a sale has been made.

In addition, 2.1% of receivables were uncollectable, with customer bankruptcy as the most common reason, followed by debt being too old in second place, and inability to locate the customer in third.

“Despite the challenging insolvency outlook for Asia, Atradius is actively working with its clients to address any cash flow concerns, and together with our partner Atradius Collections we feel confident to provide a holistic solution even in an event of payment default,” said Eric den Boogert, managing director of Atradius Asia.

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