Amsterdam, 20 October, 2016 - Payment Practices Barometer Asia Pacific shows that around 90% of the suppliers surveyed experienced late payment of invoices from their B2B customers.
Around 40% of the suppliers surveyed in the Asia Pacific region anticipate increasing the use of credit management tools to protect cash flow from B2B customers’ late payment over the next year. Nearly half of the suppliers surveyed in the region plan on checking their customers’ creditworthiness and payment history significantly more often over the same time frame. This reflects concern about the protection of corporate profitability, to ensure the viability and safe growth of the business.
Asia Pacific is forecast to continue to lead global growth in the coming years. Emerging Asia should outpace other world regions in terms of GDP growth again this year with 5.7% growth forecast. The two largest Asian economies are expected to lead the way. India’s is forecast to grow 7.5% this year, and China 6.6%, despite the slowdown in China’s economy, driven by a rebalancing of the economy towards services and consumption-led growth. Against this background, businesses are focusing on the protection of their receivables’ portfolio from customers’ late payment.
As highlighted in the October 2016 Atradius Payment Practices Barometer for Asia Pacific, around 90% of the suppliers respondents in Asia Pacific reported having experienced late payment of invoices from their B2B customers. Due to this, 34% of the suppliers interviewed in Asia Pacific reported that they had to take specific measures to correct cash flow, and 33% had to pay their own suppliers late. 25% required additional financing from banks, factors or others to pay their own creditors, and 22% had to request a bank overdraft extension. This may explain why 20% of the respondents in Asia Pacific think that cost containment and maintaining adequate cash flow will be the greatest challenges to the profitability of their business this year.
Global growth, which, consistent with last year, is forecast to expand 2.4% this year, continues to be restrained by low commodity prices, insufficient consumer demand in advanced markets, Chinese economic rebalancing, uncertainty in global monetary policy, and geo-political risks. This all raises concerns about increasing debt and deteriorating credit quality, which could very likely cause corporate bankruptcies to increase in many emerging markets; especially in those depending on trade with China and/or commodities trade.
Eric den Boogert, Director of Atradius Asia commented “Credit conditions across most emerging markets continue to tighten in response to elevated regional and global economic uncertainty. Although economies in Asia-Pacific show decent economic growth compared to rest of the world, a record number of companies have seen delayed payments which is also supported by our own claims data”.
The Atradius Payment Practices Barometer for Asia Pacific gives insights into the key factors for customer payment delays, the challenges to business profitability, and the respondents’ opinion on payment practice trends by industry in the next 12 months.
Atradius provides trade credit insurance, surety and collections services worldwide through a strategic presence in 50 countries. Atradius has access to credit information on 200 million companies worldwide. Its credit insurance, bonding and collections products help protect companies throughout the world from payment risks associated with selling products and services on trade credit. Atradius forms part of Grupo Catalana Occidente (GCO.MC), one of the leading insurers in Spain and worldwide in credit insurance.