Singapore businesses see 50% increase in B2B bad debt write-offs: Atradius

AMID increased awareness of payment default risk, businesses in Singapore have seen an “alarming” 50 per cent increase from 2021 in bad debts that could not be collected, credit insurance provider Atradius said in a Tuesday (Jun 28) press release.

The June 2022 edition of the Atradius Payment Practices Barometer survey also reported that in Asia, business-to-business (B2B) debt write-offs have risen by 60 per cent compared to a year ago.

The rise in bad debt in Singapore written off as uncollectible was particularly notable 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, Atradius said.

The uptick is a severe warning sign of mounting strain on business liquidity, it added. Survey findings showed that payment defaults were caused most often by liquidity problems, customer disputes and administrative inefficiencies.

In Asia, responses reflected that 20 per cent more companies than in the previous year reported an increased willingness to extend credit to B2B customers, signalling “very competitive” market conditions and businesses’ struggle to get additional sales revenue that would make up for the losses from write-offs.

Trading on credit would defend their competitive position and boost customer retention, Singapore’s businesses believed.

“Given the ongoing uncertainty in the market, we don’t expect the bad debts trend to recover quickly. The anxiety about the longer time it takes business to collect overdue payments from B2B customers remains acute,” said Roeland Punt, regional sales director for Asia at Atradius.

“The credit management processes of companies will be put to the test, and those businesses which have a flexible and holistic approach to the issue will be better well placed to navigate the troubled waters that may lie ahead.”

The Atradius Payment Practices Barometer for Asia Pacific – June 2022 edition polled companies through a survey questionnaire in the second quarter of 2022.

Topics covered included payment terms set for 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.