Despite minor improvements, the impact of late payments cannot be denied and businesses in Asia Pacific need more time to convert B2B invoices into cash.
Poor payment behaviour, a lack of information about the business or payment performance of customers, and economic and political risks have led to a reduction in the proportion of B2B sales in the Asia Pacific region being made on credit terms. However, the frequency of late payments seems to have declined as has the proportion of overdue B2B invoices. Still, the impact of late payments cannot be denied and it is taking businesses in the region more time to convert B2B invoices into cash. While 2018 brought small changes in the average proportion of uncollectable B2B receivables, some things remain the same – the main reason for writing off B2B receivables as uncollectable is the customer going bankrupt or out of business.
Trading on credit – still an important aspect of doing business
With the exception of Australia and Singapore the use of trade credit in B2B transactions in the Asia Pacific countries surveyed is lower in 2018 than it was in 2017. As a result, the proportion of B2B credit sales in the region decreased from an average of 45.9% in 2017 to 43.6% in 2018. This marks the third consecutive of decline. This was mainly due to an almost five percentage point decrease in transactions on credit with foreign B2B customers. By country, respondents in Japan (with an average of 49.1% of B2B sales on credit terms) seem to be the most inclined to offer credit terms; respondents in China are the least inclined (on average, 39.8% of B2B sales on credit terms).
Full article: Asia Pacific: an increase in payment duration in 2018