Atradius has recently published their latest Atradius Payment Practices Barometer for Asia Pacific.  A high-level summary of the region’s domestic B2B payments including late payment status is appended below.

Credit Sales

B2B credit sales make up about 50% of all sales.

Payment Term

Asia Pacific average payment term is 32 days while Singapore is at 36 days, higher than the region’s average.

Average DSO

Asia Pacific average DSO is at 41 days, Singapore and Indonesia are higher at 46 days.

Late Payment

Almost 90% of the surveyed respondents in Asia Pacific reported having experienced late payment of its invoices from their customers over the last year, with Singapore being the highest at 98%.

In Asia Pacific region as at due date, 45% of B2B domestic invoices have not been paid and are overdue.  Singapore average is at 47%, higher than the regional average.  Overdue invoices are on average settle 26 days after their due date.

Key Late Payment Factors

Top 5 key factors causing delays in payment for Singapore domestic invoices:

47.4% – Customers’ liquidity issues where customers have insufficient available funds to make payments due to poor / slow economy. Some are resulted by the declining of economy in China and commodity prices

34.7% – Customers are diverting available funds to finance their own business operations rather than paying off their account payables. This includes, using the funds to obtain more inventory to turn into more sales or to fuel their new project.

26.6% – Disputes over the quality of the goods or services supplied. Hence it is crucial that contracts or purchase orders specify goods or services in a clear and concise manner.  Acceptance criteria must be clearly stated, including the person who has the authority to acknowledge receipt of the delivered goods.

23.1% – Disputes over goods or services, where the delivered products do not correspond to the agreed specifications of the contract.

22.5% – Payment procedure being too complex e.g. multi-level signatories are required before releasing payment

Easing cash flow constraints

With the weak economic climate, payments can be expected to being delayed even longer and longer. The situation is worsening. Many savvy businesses are already utilising Invoice Trading as a financial tool to obtain payments faster, thus effectively managing their cash flow constraints and giving a boost to the company’s performance.

Reference

Payment Practices Barometer Asia Pacific 2016, Atradius, 19^th October 2016, link