The recent Atradius Payment Practices Barometer for Asia Pacific
revealed a drop in the average total value of sales made on credit terms in the country, from 49.1% in 2016 to 43.8% this year, mainly due to the sharp decrease in the average percentage of foreign B2B sales on credit.
The Australian suppliers surveyed said they experienced an increase in late payments from their domestic and foreign B2B customers than last year, with 88.1% of reported late payments from their B2B customers in 2017. More suppliers also reported late payments in 2017, compared to last year's 84%. To protect their businesses from late payments, 22.9% of respondents said they took specific measures to correct cash flow.
According to 34.3% of respondents, the main reason for payment delays in the country was the buyers' use of outstanding invoices as a form of financing. The key payment delay in Asia Pacific overall, on the other hand, was insufficient availability of funds.
The report also revealed that with China as the country's main trading partner, Australian respondents were most concerned about risks from the slowdown in Asia rather than those from Brexit and US protectionism. The respondents who said they will increase creditworthiness checks on their buyers were at 33.8%; and 29.6% said they will increase their monitoring of their buyers' credit risk.
Mark Hoppe, managing director for ANZ at Atradius, said that despite a positive outlook for the global economy, with global GDP growth expected to expand 3% in 2018, businesses may face increased uncertainty due to rising protectionism, monetary tightening, and the ongoing slowdown and rebalancing of China’s economy.
“This could further cloud the global insolvency outlook, weakening business confidence, investment, and consumer spending,” Hoppe said. “With this in mind, the main focus of any business should be on protection of cash flow.”
Atradius said the total value of uncollectable B2B receivables in Australia was at 1.6%, lower than the regional average of 2.1%. These receivables were written off as uncollectable mainly because the customer went bankrupt or out of business (37.5%), the inability to locate the customer (32.7%), and old age of the debt (37.9%).
Business collapse shows importance of trade credit cover
Asia-Pac businesses worried over cash flow protection
Australia has posted the second-lowest average percentage of transactions on credit in the Asia Pacific despite a stable economic performance, according to a trade credit insurer.