Advertise Here
Icon

Directory

IconActuaries
IconAdministration Outsourcing
IconAsset Managers
IconAssociations & Institutes
IconAuditors
IconBanking
IconBBBEE Consulting and Verification Agencies
IconBusiness Chambers
IconBusiness Process Management
IconBusiness Process Outsourcing
IconCompliance
IconConsumer Protection
IconCorporate Governance
IconCredit Bureaus
IconCurrencies
IconDebit Order Collection Facilities
IconEducation and Training
IconFAIS
IconHuman Resources
IconInformation Technology and Software Partners
IconInvestment Consulting
IconInvestment Fund Managers
IconLegal
IconLISPs
IconListed Equities
IconOmbud
IconParticipation Bond Managers
IconPolicy Administration
IconPolicy Trading
IconProperty Unit Trusts (PUTS)
IconPublications
IconRegulatory Authorities
IconStock Exchange
IconSurveys and Research
IconTraining Courses & Workshops
IconUnit Trust Fund Managers
IconWellness Programs
Image
  Subscribe To »

Asia Corporate Payment Survey 2020: COVID-19 will overturn last year’s incipient recovery

Published

2020

Tue

07

Jul

After a 2019 that was dominated by trade tensions between the United States and China, Coface has observed an incipent recovery in Asia (excluding China), supported by supply chain shifts and additional liquidity from the US Federal Reserve. Average payment terms improved in 2019, rising to 67 days compared to 69 days in 2018. And while 65% of companies reported experiencing payment delays in 2019 (63% in 2018), the average payment duration decreased to 85 days in 2019, down from 88 days in 2018.

However, this recovery will prove short-lived, as the COVID-19 pandemic severely threatens the growth outlook, with many economies in the region expected to experience their biggest contraction since the Asian Financial Crisis in 1997-1998.

 

On a GDP-weighted basis, the growth rate of Asia’s economies will fall to 0.3% in 2020 (-0.65% excluding China). This can be compared to the 2019 growrth rate of 4.6%, or even the 1998 rate, which – despite everything – was still higher: 2.9% (0.76% excluding China).

 

Disparities in payment periods and late payments between countries

2019 saw the first improvement in average payment terms since 2015. The longest payment terms were in Japan (91 days), China (86 days) and Taiwan (72 days), while all other economies in the Asian countries surveyed had payment terms below average. At the opposite end of the spectrum was Australia, with a 36-day period.

 

Payment delays were longest in China (96 days), Malaysia (84), and Singapore (71). Since 2019, payment delays have increased in Thailand (up 7 days to 69) and in Malaysia and Taiwan (both up to 2 days to 67).

 

The majority of respondents (48%) said that the main driver of the increase in payments delays was customers’ financial difficulties. These difficulties predominantly came from fierce competition impacting margins (41%) and a lack of financial resources (22%).

 

Contrasting situations across sectors: energy, ICT and construction struggling

Average payment terms were longest for the energy, information & communications technology (ICT), and construction sectors, with more than 20% of companies offering payment terms of 120 days or more.

 

These same sectors also recorded the longest payment delays, with 24%, 28% and 26% of respondents reporting payment delays of 120 days or more, respectively.

The study of the ratio of ultra-long payments delays shows a risk of cash flow deterioration in certain regions and sectors

Payments delays and cash flow risks often go hand in hand. To assess cash flow risks, Coface studies the ratio of ultra-long payment delays (ULPD, over 180 days). When these constitute more than 2% of annual turnover, a company's cash flow may be at risk. In Coface’s experience, across the world, 80% of ultra-long payment delays (ULPDs, over 180 days) are never paid.

 

The proportion of the Asian companies studied who were experiencing ULPDs exceeding 2% of annual turnover fell to 31% in 2019, down from 38% in 2018. However, a closer look reveals that this "recovery" is equivocal: the number of companies reporting ULPDs exceeding 10% of annual turnover remained constant in 2019 (13%).

 

Excluding China, the highest proportion of companies with ULPDs exceeding 10% of annual turnover were in Malaysia (7%), Singapore (7%) and Thailand (6%). Similarly, the proportion of countries reporting ULPDs exceeding 10% of annual turnover was highest for the transport, energy, and construction sectors.

 

2020 will be marked by the worst recession since the Asian financial crisis of 1997-1998.

Coface expects the Asia-Pacific region to contract sharply in 2020 (except for China and India among the nine economies studied), before rebounding in 2021. The contraction in GDP will be most marked in Thailand (-5.0%), Hong Kong (-4.0%), Singapore (-3.5%), Japan (-3.0%), Malaysia
(-2.0%) and Australia (-1.9%), in a context of a slowdown in the tourism industry and world trade.

 

According to Coface forecasts, GDP growth rebound will not rebound until 2021, reaching 6.2% (4.65% excluding China).

 
Source: Coface
 
« Back to previous page Print this page » |
 

Breaking News »

SANDWICH PANELS: A Burning Issue - Understanding the Risk

Sandwich Panel related fires have resulted in major property damage and business interruption losses over the years. What are Sandwich Panels? Sandwich Panels or Composite Panels are structures made ...
Read More »

  

Want to withdraw retirement funds on emigration? National Treasury and SARS say try again in 3 years' time

            by Joon Chong, Partner & Wesley Grimm, Associate at Webber Wentzel   The National ...
Read More »

  

THE NETHERLANDS - CORPORATE PAYMENT SURVEY 2020

This study is the very first Coface survey on corporate payment experience in the Netherlands. Originally, this survey had been conducted between February and early-March 2020 (the first quarter of 2020, Q1 2020), ...
Read More »

  

Will Europe remain a renewable energy powerhouse after the pandemic?

Global renewable energies: continued ascension despite the COVID-19 pandemic   Paris, September 8, 2020 – The COVID-19 health crisis has had a negative impact on short-term global renewable energy ...
Read More »

 

More News »

Image

Healthcare »

Image

Life »

Image

Retirement »

Image

Short-term »

Advertise Here
Image
Image
Advertise Here

From The Glossary »

Icon

Excess Of Loss Reinsurance:

Reinsurance cover which, subject to a specified limit, indemnifies the ceding company against loss in excess of a specified deductible. It embraces various types of reinsurance such as any one risk reinsurance, any one event reinsurance, catastrophe reinsurance, aggregate excess of loss reinsurance and stop loss reinsurance. Such treaties do not usually apply to specific policies but to aggregate losses incurred under all policies subject to the ...
More Definitions »

 

Advertise

 

eZine

 

Contact IG

 

Media Pack

 

RSS Feeds

By using this website you agree to the Terms of Use.
Copyright © Insurance Gateway (Pty) Ltd 2004 - 2020. All Rights Reserved.