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‘Ultra-Late’ Invoices Make Chinese Firms Wait Months For Payment

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Late payments are often the topic of discussion in the U.K., less often but still prominently so in the U.S. and throughout Europe and Australia. But as industry experts know, small businesses everywhere are being forced to deal with longer payment terms on their invoices and with corporate customers paying those bills off later.

A new report from Coface found that the issue has permeated China’s business community, too.

Analysis found that 80 percent of Chinese companies are dealing with overdue payments. One thousand businesses responded to the Coface survey, which aimed to look at corporate credit risk mitigation, according to reports.

The results, released Thursday (March 17), pointed to slowing economic growth in the country as compounding this issue, which could lead to worse problems for 2016 and beyond.

“It is not expected that nonpayments will improve in the short term,” the report concluded, noting that the local currency, RMB, continues to face downward pressure and the nation is in the midst of some serious stock market volatility.

The 80 percent of businesses that have experienced overdue bills in 2015 is only slightly up from the 79.8 percent that said the same in 2014, however; but the majority of companies (58.1 percent) also said the volume of their overdue invoices has also risen in 2015.

About 10 percent of the companies surveyed said that their average overdue invoices are greater than 150 days later; 17.9 percent said they have had to deal with more than 180-day-late bills, deemed “ultra-long” overdue invoices.

The China Banking Regulatory Commission recently uncovered an increase in nonperforming corporate loans, hitting the highest level since 2009, reports said. “In this context,” Coface noted, “the risk of a rise in nonpayments should not be underestimated.”

Coface forecasted another record slowdown of economic growth for the nation; the recent prevalence of investors using margin finance to buy company shares could also increase corporate credit risk, researchers said.

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