B2B Payments

APAC Firms’ Patience Runs Thin When It Comes To Late Payments

Businesses across the Asia Pacific region want their late payments handled faster than the rest of the world, and they’re willing to get aggressive to chase down their receivables, according to new research.

Atradius Collections has published its latest report, the Global Collections Review, for the Asia Pacific region. As a survey that focuses on B2B suppliers in the region, the study examines how quickly (or slowly) businesses are paying each other, and how companies respond to these trends.

According to Atradius, the report can provide visibility into more than simply debt collection practices. “The goal of the Global Collections Review is to provide an understanding of the dynamics of collection practices and the way this reflects on business behavior at country level,” the report explained.

Lower Patience

Businesses in the Asia Pacific do things a bit differently than the rest of the world. According to the report, APAC firms tend to trade regionally (with a few exceptions), and are thus more willing to sell to corporate buyers on credit within their own countries.

A bit more than half of these bills are paid on time, the report concluded, which leads to some unique characteristics in late payments and the bill collection practices of these companies.

Researchers found that the average value of B2B receivables written off as uncollectable in the Asia Pacific region is 2 percent – higher than the 1.2 percent average across Europe. The statistic could be closely linked to the finding that APAC businesses are more willing than the rest of the world to work with debt collection agencies in pursuit of their unpaid invoices.

[bctt tweet=”The average value of APAC B2B receivables written off as uncollectable is 2%”]

Half the businesses in the region submit their late receivables for debt collection sooner than 90 days past the due date – a higher rate than their counterparts in Europe as well as North and South America, the study found.

But while researchers concluded that B2B businesses in the region are more “results-driven” in their response to late payments, analysts also concluded that their inexperience in dealing with past-due invoices means they are more likely to outsource debt collection efforts.

“Companies in the Asia Pacific region are lacking the experience, knowledge and execution capability to recover receivables themselves,” the company stated.

Researchers also concluded that APAC companies – especially those in China, Indonesia and India – are more open to the use of the final demand letter, a document that warns buyers to settle their bills or be referred to a debt collection agency.

[bctt tweet=”APAC companies are more open to the use of the final demand letter”]

Atradius Collections’ Regional Head of Asia Pacific, Tony Au, explained that this behavior correlates with business culture in this part of the world.

“Business relationships in Asia are mainly built on trust,” he explained. “As there is an upward trend in business fraud, it is crucial to check if the actual business is genuine early in the sale process.”

He added that in addition to buyer risk assessments, businesses in the region are keen to verify invoices with suppliers to mitigate the chance of fraud.

The China Effect

The impact of China’s economy on the rest of the globe is complex and well-documented. According to Atradius Collections Managing Director Raymond van der Loos, this is no different when it comes to B2B payment behavior.

“The economic growth in China is cooling down further, which impacts the entire Asia Pacific region, as there are strong interrelationships in supply chain trade,” he explained in a statement issued this week announcing the research results. “Measures are being implemented, which are restricting access of corporations to bank financing. Consequently, it is becoming more difficult for companies in China and Asia Pacific to obtain the required working capital for their day-to-day business operations.”

The executive added that China’s slowing economy and the resulting banking restrictions have also led to an increase in business fraud as well as in defaulted payments – which both add to the domino effect of China’s slowing economy.

“Companies are reacting to this by submitting their outstanding receivables to collection agencies at an earlier stage,” van der Loos added. Analysis found that 17 percent of companies surveyed submit an outstanding invoice to a debt collection agency as early as 1-30 days outstanding.

While late payments is a global problem that can stifle the growth of a business, especially SMEs, Atradius noted that the prioritization of strong buyer relationships, which can lead to more timely payments, poses a threat to debt collection businesses.



The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.