Late Payments are an Increasing Concern for Asian Business
SINGAPORE, June 6, 2011 / PRNewswire-AsiaNet/ –
The majority of Asian businesses are now more concerned about late payments and defaults than they were before the recession, according to a new independent study released today which was sponsored by leading global credit insurer, Atradius and conducted by CFO Innovation Asia.
This key result is among a number of valuable findings from the new Pan-Asian study, which was undertaken with companies of all sizes in more than 10 countries, including China, Hong Kong and Singapore, to identify current attitudes and experiences of payments and payment risks following the
global financial crisis.
The research also found that there was some cause for the heightened concern as 75% of respondents indicated payments were being made outside of their agreed payment terms and almost half (49%) reported that requests from customers for extended payment terms had increased.
Martin Jones, Atradius’ Singapore Country Manager, explained: “While the research identifies a number of key factors of concern to Asian businesses, perhaps the most revealing finding is the methods companies are using to deal with the situation. Protecting themselves by reducing exposure to less
creditworthy companies was the preferred approach for 80% of respondents, while 40% said that they will focus on up-front payments as a measure to improve payment and cash flow.”
He added: “The issue arising from both of these approaches is that while they limit exposure to risk, they can also inhibit growth and opportunities for Asian business in that over-restrictive trading terms drive potential customers to seek suppliers elsewhere with less cautious and more attractive credit terms. More favourable credit terms can often be offered by businesses protected by trade credit insurance. As credit insurance covers businesses to an agreed level of credit, it enables companies to take advantage of opportunities without needing to introduce potentially inhibitive measures such as up front payment, since a policy pays out up to 90% of the value of the amount outstanding if the policyholder’s buyer doesn’t pay.”
A full version of the new study, entitled “Receivables after the crisis” is available for download from http://www.atradius.sg
The Atradius Group provides trade credit insurance, surety and collections services worldwide, and has a presence through 160 offices in 42 countries. Atradius has access to credit information on 60 million companies worldwide and makes more than 20,000 trade credit limit decisions daily. Its products help protect companies throughout the world from payment risks associated with selling products and services on credit.
SOURCE: Atradius N.V.