The eleventh edition of the Atradius Payment Practices Barometer addresses credit risk in Southeast Asia, analyzing the most important aspects, such as international payment methods and business-to-business practice. The aim is to provide companies operating in the region with an increasingly up-to-date picture of commercial dynamics. In fact, without a careful understanding of the credit and payment mechanisms of local and foreign players, companies can find themselves facing strong competitive disadvantages from the point of view of their cash flows.
One of the key indicators is the increase in the level of receivables receivable in the region, both in terms of domestic and international trade (+1,3% for both in 2012). The difference between the economies considered is quite large, ranging from the increase in debt in Japan (+2,5% on average), up to the levels of India and Singapore (+7% for both). Surprisingly, Australia had the third highest level of bad debts (6,8%), while its economic performance was second only to Japan.
Although late payments account for 30% of business-to-business invoices, many of which remain unpaid for more than 90 days, the situation shows some improvement compared to 2011. Japan remains the number one in reliability, with less than 20% of unpaid domestic and foreign invoices, while in Hong Kong they amount to 34,3% and 36,3%, respectively. These results far exceed the European and American averages, a sign that, despite the improvements of the last year, defaults may increase in the short term, due to the strong trade ties and exposure of many European and American companies.
The manufacturing sector records the highest number of deferred payments, for more than 51 days, against 32 days for financial services, although the delays are generated precisely by the complex procedures and inefficiencies of the banking system, severely constraining liquidity in the local market.
29,6% of correspondents who took part in the Atradius study expect a deterioration in commercial credit risk in the region. And since 47,7% of local trade and 42,4% of foreign trade is subscribed in terms of credit, the importance of a management capable of effectively and promptly preventing liquidity crises in cash flows it is essential to operate in a highly competitive economic environment such as that of South-East Asia.
Attached is the Atradius study.
Attachments: Atradius_PPB11_APAC.pdf
