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Which markets in Asia are ‘credit-friendly’?
Taiwan and China are the markets that are the least ‘credit-friendly’ in the region with less than 40% of respondents conducting business-to-business (B2B) sales over credit, a new survey shows.
Darryl Yu 27 Oct 2016
Taiwan and China are the markets that are the least ‘credit-friendly’ in the region with less than 40% of respondents conducting business-to-business (B2B) sales over credit, a new survey shows.
In contrast, over 50% of survey participants from Hong Kong, Japan and Singapore tend to offer trade credit insurance to their customers indicating that developed markets are quite familiar with the trade credit insurance process, according to survey conducted by credit insurer Atradius.
Asia is also experiencing more missed payments, the survey shows. Around 90% of survey respondents in Asia-Pacific reported having experienced late payments of invoices from their B2B customers over the past year. As a result, close to half of the respondents stated that they would check payment track records more often over the next 12 months.
Reasons for regional late payments stem from a variety of issues but most (46%) respondents point to liquidity issues.
“These [liquidity issues] appear to stem from challenging business conditions, particularly in those countries in Asia-Pacific affected by China’s slowdown and falling commodity prices,” notes the survey. Other notable issues mentioned were the complexity in the payment procedure and intentional delay of payments.
“B2B customers most often delay invoice payment due to disputes over the quality of goods and services provided,” comments the report. Taiwan and Indonesia specifically have been hardest hit by domestic late payments due to slowing business activity within those two countries.  
When looking to the future, most of the respondents in Asia-Pacific believe that cost containment and maintaining adequate cash flow will be the greatest challenge to the profitability of their business going forward. However, getting there would require a more proactive approach from companies in understanding the financial reliability of their customer base.   
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