3 days ago
Asia sees ‘concerning' rise in long payment delays amid turbulence: report
Companies across the Asia-Pacific region – and especially those in China – are becoming more cautious about selling on credit, as a turbulent global economy leads to a 'concerning' rise in long payment delays, a new report has found.
Two-thirds of Asia-Pacific firms expect payment terms to shorten over the next six months, which suggests 'caution and higher priority for cash preservation amid heightened uncertainty', global trade credit insurer Coface found in its latest Asia Payment survey released on Wednesday.
Though payment terms edged up slightly in 2023, rising from 64 days to 65 days, they remained well below the 2018-2022 average of 69 days, reflecting tighter credit conditions, according to the survey of 2,600 companies conducted between December 2024 and March 2025.
Mainland China recorded the steepest drop in the share of firms offering sales on credit among the nine economies surveyed, which also included Australia, Hong Kong, Taiwan, Japan, Malaysia, India, Singapore and Thailand.
Some 65 per cent of Chinese firms said they offered payment terms in 2024, down 14 percentage points from a year earlier, the report said. India followed with a nine-point drop, while Hong Kong posted the biggest increase – up 10 points to 91.4 per cent.
The share of Asian companies reporting payment overdues fell to a record low of 49 per cent last year, from 60 per cent in 2023, which the report attributed to 'longer payment terms in most markets [that] provided more time for companies to settle payments and avoid overdues'.
But what Coface called a 'concerning trend' was the sharp rise in Asian firms reporting ultra-long payment delays – lapses of over 180 days – on fees exceeding 2 per cent of their annual turnover, which jumped to 40 per cent in 2024 from 23 per cent a year earlier.
The company said this signalled 'a sharp deterioration in credit risk', adding that based on its experience 80 per cent of those ultra-long payment delays eventually led to defaults. Competition in the domestic market is extremely fierce, with the payment cycles becoming longer and delayed payments widespread
A similar pattern was seen in China, where 49 per cent of affected firms reported such overdues in 2024 – up sharply from 33 per cent a year earlier.
Wang Jie, the owner of a footwear factory in southern China's Guangdong province, is one of many Chinese suppliers suffering from long payment delays.
Wang is still waiting to receive an overdue payment of more than 260,000 yuan (US$36,200) from the subsidiary of a large Shenzhen-based clothing company, even after winning a lawsuit related to the delayed payment in 2023.
'Competition in the domestic market is extremely fierce, with the payment cycles becoming longer and delayed payments widespread,' Wang said.
The current economic uncertainty – mainly driven by slower demand, excessive competitive pressure and rising costs – has made Asian companies pessimistic about their future prospects. According to the report, 33 per cent of respondents expected their business activity to worsen this year, up from just 14 per cent in 2023.
'The economic outlook for 2025 continues to weaken on mounting trade risks amid high uncertainty over global economic policy,' the report added.
Over the next six months, 57 per cent of respondents in the Asia-Pacific region anticipated deteriorating payment behaviour, while just 32 per cent expected any improvement.
Additional reporting by He Huifeng - SOUTH CHINA MORNING POST
