Debts written off as uncollectable showed an alarming 50% increase in the Singapore market compared to our past survey.
Introduction
The 2022 edition of the Atradius Payment Practices Barometer survey findings for Singapore is a valuable opportunity to hear directly from companies about how their business operations are coping with the disruptive impact of the current challenging economic and trading circumstances.
Topics covered include: payment terms set for business-to-business (B2B) customers, the average time it takes to turn overdue B2B invoices into cash, the impact of late or non-payment on the business, and expected challenges to profitability during the coming months.
The survey questionnaire was completed by businesses in Singapore during Q2 2022. Responses given by companies polled are contained in the report for Singapore, which is part of the June 2022 edition of Atradius Payment Practices Barometer for Asia available on this website by clicking here.
Key takeaways from the report for Singapore
Write-offs a big concern amid increased awareness of payment default risk
- Debts written off as uncollectable showed an alarming 50% increase in the Singapore market compared to our past survey, particularly in the local agri-food industry – a sector which has the lowest percentage of businesses who believe in the benefits of strategic credit risk management. Our survey found that payment defaults were caused most often by liquidity problems, customer disputes and administrative inefficiencies – and that companies polled in Singapore spent more time and resources chasing unpaid trade debt arising from trading on credit with B2B customers.
- The main factors for trading on credit reported by businesses in Singapore are the retention of existing customers and a need to defend their competitive position. Our survey found there was a greater perception of the risk of customer payment default and that there was a shorter average time overall for payment of invoices. However, it also reveals that many Singapore companies (35%) are prepared to offer longer terms for payment when they can mitigate the costs involved by having credit insurance
Credit insurance rises to stabilise DSO amid generally positive outlook
- There was a clear deterioration of DSO in the Singapore market, mainly due to a more liberal credit policy and reduced collection efficiency. This prompted a widespread appreciation across all industries of the need for strong strategic credit risk management. Our survey showed that nearly 30% of the companies in Singapore are choosing to address the issue with in-house management, while the rest are opting for credit insurance or other finance solutions. This trend means companies expect DSO stability in the coming year.
- An optimistic outlook overall was found among the businesses polled in Singapore. The majority (64%) anticipates an increase in trading on credit terms and they also believe that payment practices will improve in the next few months. The impact of pandemic remains a major concern for Singapore companies, along with safeguarding cash flow levels and keeping pace with rising demand for products and services.
Key survey findings for Singapore
- Half of B2B turnover sold on credit, focus on retention of existing customers
- B2B customers given shorter time to pay
- B2B bad debts trend upward, collection costs rise too
- Longer invoice-to-cash turnaround sparks cash flow deterioration
- Growing awareness of need for strategic credit risk management
- Positive outlook for B2B trading on credit, chiefly to grow sales
- Upward trend of credit insurance take-up enables DSO stabilisation
Interested in finding out more?
Please download the complete report for a complete overview of the payment practices in Singapore and in the following local industries:
- Agri-Food
- Chemicals/Pharma
- Construction
- Electronics/ICT
- Machines
