Asia Pacific: Enterprises face rising credit risk despite short payment delays

Coface’s 2022 Asian Corporate Payment SurveyConducted between November 2021 and February 2022, provides insights into the evolution of payment behavior and credit management practices of approximately 2,800 companies across the Asia Pacific region in the next pandemic year.

Respondents came from 9 markets (Australia, China, Hong Kong SAR, India, Japan, Malaysia, Singapore, Thailand, Taiwan) and 13 sectors in the Asia Pacific region.

No worsening of payment delays despite the impact of COVID except in China

The improved economic situation in 2021 contributed to a significant reduction in the duration of payment delays across the Asia-Pacific region, declining from an average of 68 days in 2020 to 54 days in 2021 to the lowest level in five years. became. The percentage of respondents experiencing delinquency was stable at 64%, compared to 65% in the previous year. Of the nine economies covered, payment delays were the shortest in Malaysia and Singapore. In contrast, China Was the only country to record an increase in payment delaysIt was also the country with the longest average payment delays.

However, the investigation has highlighted some concerns. The percentage of respondents who mentioned an increase in delinquency increased It was 35% in 2021 and 31% in the previous year. In addition, more companies reported ultra-long-term payment delays (ULPD) of over 10% of annual sales. This increase is primarily due to China’s already high share of 27% in 2020 increased to 40% in 2021.

The proportion of ULPD increased slightly in Australia and India, but was stable or declining in the other six economies and decreased significantly in Hong Kong. Most of the ULPDs are unpaid, so if these ULPDs make up more than 2% of a company’s annual turnover, cash flow risk tends to increase.

For each sector The increase in companies experiencing ULPD of over 10% was particularly noticeable in the metals sector.14 pp increased to nearly 23%, the largest number of registrations in 13 sectors. Other sectors such as construction, ICT, transportation and textiles also face significant cash flow risks.More than 30% of companies that have experienced ULPD report that such delays account for more than 2% of annual sales.

Economic Expectations: Optimistic views continue, but concerns about rising material prices are high

Overall, optimism is not compromised, 71% of respondents expect economic growth to improve in 2022. But this optimism was unequal throughout the region... Singapore is optimistic compared to the Asian average, with 83% (+17 pp) expecting higher growth. Japanese and Thai companies were more likely to recover in 2022 as their recovery was relatively restrained in 2021, and their confidence increased by 14 pp to 75% and 80%, respectively. In contrast, Malaysia’s share is only 44%, showing a significant decrease (-29 pp) compared to last year amid rising political uncertainty, with the potential for the 2022 general election. ..

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