Key Takeways
The Asia Corporate Payment Survey by Coface, conducted between December 2023 and March 2024, analyzed payment behavior and credit management of around 2,400 companies across nine Asia Pacific markets. The survey shows a tightening of credit conditions, with average payment terms decreasing from 66 to 64 days and payment delays dropping from 67 to 65 days.
However, late payments increased from 57% to 60% of companies experiencing such delays, particularly affecting the textiles and construction sectors. These delays are attributed to excessive competition, slowing demand, and increased production costs, with some markets experiencing improved financial stability post-pandemic.
- Despite challenges like inflation, interest rates, and geopolitical risks, 56% of firms anticipate an improved economic outlook in 2024. Coface forecasts over 4% economic growth for the Asia Pacific region in 2024, with varying payment delay durations—Japan experiencing the fastest at 50 days and Australia the slowest at 83 days.
The Asia Corporate Payment Survey, conducted by Coface between December 2023 and March 2024, provides insights into the evolution of payment behaviour and credit management practices of about 2,400 companies across the Asia Pacific region. Respondents are active in nine markets (Australia, China, Hong Kong SAR, India, Japan, Malaysia, Singapore, Taiwan and Thailand) and 13 sectors.
- Overall, credit conditions are tightening, with payment terms decreasing to 64 days from 66 in 2022. In the meantime, the duration of payment delays decreased from 67 to 65 days.
- Late payments were more frequent, with 60% of companies experiencing them compared with 57% in 2022, but their average duration fell from 67 to 65 days. Ultra-long payment delays have increased. Textiles and Construction are the most affected sectors by these delays.
- 56% of companies expect the economic outlook to improve in 2024.
The year 2023 was one of normalisation from the pandemic, but the economic landscape continued to offer its share of challenges in the form of an elevated inflationary and interest rate environment amid persistent geopolitical risks. The surveyed companies expressed the same concerns with about half of respondents citing slowing demand and over-competitive pressures as the two main risks to their company’s operations in 2024. Coface forecasts economic growth in Asia Pacific to maintain at over 4% in 2024, with the region still the fastest growing in the world.
said Bernard AW, Chief Economist for Asia-Pacific at Coface
Payment delays: Significant late payment rise in textile and construction
The share of companies surveyed reporting payment delays rose from 57% in 2022 to 60% in 2023, with only China and Japan driving the rise, largely due to their tighter payment terms. Meanwhile, all other markets covered witnessed a reduction in payment delays reported, suggesting improved financial stability after the pandemic. Excessive competition, slowing demand, slowdown in cash flow, and customers’ payment defaults are the main cited reasons for payment delays in the region.
Textile and Construction saw a significant increase in late payments reported. Textile faced higher production costs and rampant demand, and Construction suffered sluggish China property sector and a high interest rates environment in most markets.
While the averagepayment delay duration dropped from 67 days in 2022 to 65 days in 2023, most markets covered saw a rise. Australia, Hong Kong and Malaysia saw the highest increase, while only China, Taiwan and Thailand saw a decline. Japan had the shortest average payment delay at 50 days, and Australia had the highest at 83 days.
The duration of payment delays increased the most in the textile and agri-food sectors, both by 11 days. Energy and pharmaceuticals saw the biggest falls, of 11 and 10 days respectively. The construction sector still has the longest payment delay (76 days), and the pharmaceutical has become the one with the shortest (57 days).
The proportion of respondents experiencing ultra-long payment delays (ULPD) over 2% of their annual sales has risen from 26% in 2022 to 29% in 2023. This 2% threshold represents a very…
