Businesses across Asia are grappling with a surge in overdue payments and invoices, a new report finds.
From Taiwan to India, companies are taking longer to pay their bills, forcing suppliers to spend time chasing down overdue invoices and scrambling to make ends meet, according to an annual Payment Practices Barometer released by Atradius, a trade credit insurer.
And the growing payments crisis in Asian is poised to only worsen. While released in June, the Atradius report, which predicts “stormy times ahead,” is based on survey results taken in March, when the coronavirus crisis was just still gathering steam.
Overall, more than 1,400 companies answered the survey, which covers China, Singapore, India, Taiwan, the United Arab Emirates, Indonesia and Hong Kong.
More than half — 52 percent — reported they are now waiting on payments from customers with overdue invoices, a more than 40 percent increase over 2019.
While the UAE had some of the highest rates of overdue invoices, companies in Singapore and Taiwan also saw big increases as well, though both remained below the regional average.
“With the global economy dipping into recession payment default risks are growing,” said Andreas Tesch, chief market officer of Atradius, in the annual payments barometer report. “We expect bad debts and insolvencies to continue rising into 2021. Suppliers need to manage reduced demand and financial stress. Minimizing these burdens with thorough creditworthiness assessments and ensuring adequate financial sustainability will be key to survival for many of these businesses.”
Companies across Asia, in turn, are wielding a number of credit management tools to hedge risk and better manage their cash flow, the report finds.
In particular, businesses are trying to move away from “single-buyer concentrations,” while upping demands for cash payments as well as “requests for letters of credit, payment guarantees, self-insurance and the adoption of credit insurance,” the report found.
At the same time, large corporations are looking to shore up their supply chains, as reported by PYMNTS. For global traders, the emphasis continues to be placed on the urgency for companies in a strong financial position to support their supply chains by paying vendors on time — and in some cases at an accelerated pace.