Singapore businesses threatened with payment delays

7% of local B2B receivables are uncollectable.

According to Atradius’ Payment Practices Barometer, 7% of local B2B receivables in Singapore were uncollectable, a significant increase from the 4.4% recorded around the same period last year. 

Here's more from PBB:

This figure is higher than the Asia Pacific average of 5.3%. Many Singaporean businesses predict that the situation will either remain the same or worsen in the future.

20.8% of the respondents see more payment delays in the next 6 months, while 45.3% of the respondents say that the situation will remain unchanged.

The pessimism among business leaders is also due to the fact that Singapore’s average Days Sales Outstanding (DSO) is 47.4, slightly higher than the Asia Pacific average of 44.

A total of 35.5% of businesses reported an increase of their average DSO. The PPB study found that much of the payment delays in Singapore and the rest of the Asia Pacific were caused by liquidity constraints and cash flow issues.

Half of Singaporean businesses identified insufficiency of funds as the main cause for delayed payments from domestic B2B customers, notably in the wholesale, retail, and distribution sector.

These sectors are the most likely to see an increase in trade credit risk in the coming months. Payment delays are pushing 68.1% of the respondents to become careful when dealing with buyers by checking their creditworthiness more often.

83.3% of survey respondents from micro enterprises will be the most active in checking buyers’ track record and credit worthiness. Medium-sized enterprises plan to have active credit management activities in light of this trend.

The November 2012 Atradius Payment Practices Barometer surveys over 1,600 companies in eight key Asia-Pacific markets, including Australia, China, Hong Kong, India, Indonesia, Japan, and Taiwan. A total of 203 Singaporean companies were included in the survey.

Says Michael Frigo, Country Manager of Atradius Singapore, “While relatively performing better than their Western counterparts, local companies are becoming wary when dealing with their buyers. 64.6% of respondents said they will request more secured forms of payment from their buyers, which may strain business relationships that have been built up over time. Companies should consider the option of using credit insurance, which will give business leaders peace of mind without damaging guan xi. This is where Atradius comes in, with our availability of products that can help Singapore companies weather the storms of 2013.”