HONG KONG SAR – Media OutReach – 5 July 2021 – Coface‘s 2021 Asia Corporate Payment Survey, conducted between October 2020 and March 2021, provides insights into the evolution of payment behaviour and credit management practices of over 2,500 companies across the Asia Pacific region during a pandemic year. Respondents came from nine markets (Australia, China, Hong Kong SAR, India, Japan, Malaysia, Singapore, Thailand and Taiwan) and 13 sectors located in the Asia-Pacific region.
No deterioration of payment delays despite the impact of COVID
65% of respondents experienced payment delays in 2020, similar to 2019. Despite a weakened economic environment, the survey conducted by Coface shows that payment delays improved in 2020, with the average duration of overdue payments falling to a five-year low, thanks to strong government policy responses. Shorter payment delays were seen across six of the nine surveyed economies and 10 out of 13 sectors. This trend was partially due to robust and coordinated government policy responses to soften the impact of the pandemic on business activity, as well as the move by companies towards tightening credit management and strengthening cash-flow resiliency. This tighter credit policy was reflected by the average duration of payment delays in Asia Pacific, which fell to 79 days in 2020, down from 85 in 2019, and its shortest length since 2015.
However, there was a build-up of credit risks in Australia and Hong Kong, with both reporting a strong increase in late payments, and more crucially, a sharp rise in ultra-long payment delays (ULPDs, over 180 days) amounting to over 2% of annual turnover. According to Coface’s experience, 80% of ultra-long payment delays (ULPDs, over 180 days) are never paid. Meanwhile, the retail, construction, and transport sectors – among the worst hit by the pandemic – saw the largest increases in ULPDs over 2% of their annual turnover, indicating an increase in cash flow risk.
Economic improvement in 2021: Companies in Australia and the automotive industry are most optimistic
2020 was characterised by the shock of Covid-19 on both economies and society. Unlike previous recessions, which tended to be gradual and shallower, the pandemic recession was rapid and deep due to the unique elements of the coronavirus pandemic. Companies were surveyed about the impact of Covid-19 on their business operations. In Japan and Taiwan, a reduction in demand was the top reason impacting companies’ sales and cash-flows, whereas in China, higher material prices were the most-cited reason. In India, where many companies rely on migrant workers, the top impact cited was insufficient workforces due to lockdown measures disrupting business operations.
