PR96750

AMSTERDAM, June 28, 2022 /PRNewswire=KYODO JBN/ --

-- Alarming 60% increase in business-to-business (B2B) write-offs expected to

pose a severe threat to liquidity of companies in Asia.

Chasing down unpaid B2B trade debt has become a major headache for Asian

companies trading on domestic and export markets. They are facing sharply

increased costs to manage customer credit risk in-house and thus protect cash

flow from disruption caused by the current challenging economic and trading

environment.

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The problem becomes even more serious with long-term unpaid B2B trade debt

(more than 90 days) that is written off as uncollectable despite several

attempts to receive payment. In this situation businesses struggle to find

additional sales, a measure that could help to offset their losses and thus

avoid putting liquidity under pressure and a company's entire future at risk.

Severe warning signs of a mounting strain on business liquidity are evident in

the staggering 60% increase in business-to-business (B2B) bad debts that could

not be collected, compared to our survey in 2021. This is the major concern

spelled out by businesses polled in seven markets in Asia (China, Hong Kong,

India, Indonesia, Singapore, Taiwan, and Vietnam) and in the United Arab

Emirates for the 2022 edition of the Atradius Payment Practices Barometer

Survey for Asia (https://group.atradius.com/publications/payment-practices-barometer/asia-2022-concern-over-upward-trend-of-bad-debt-write-offs.html).

Taiwan sounded the highest alarm, with a bad debt write-offs figure nearly

three times higher than found in our past survey of the market -- now at 8% of

the total value of B2B invoices. Businesses in Hong Kong and Singapore also

said they were taking a serious hit from increased write-offs, both seeing an

average 50% increase. Another country suffering was Indonesia, with a reported

40% increase in write-offs. Vietnam was included in the survey for the first

time and companies there said liquidity was being dented both by write-offs (at

6% of the total value of B2B invoices) and unpaid B2B trade debt, which was

affecting around half of the B2B trade value.

A further worry for companies in the current challenging economic and trading

circumstances is the difficulty of recovering profits when they are

experiencing a high impact from write offs. The Atradius survey in Asia reveals

that 20% more companies than in the previous year reported an increased

willingness to extend credit to B2B customers. This is a signal that current

market conditions are very competitive and that businesses struggle to get the

additional sales revenue that would make good the losses from write-offs. The

survey also found that a serious concern for companies in the months ahead is

the ability to keep pace with demand (33%) as well as resilience of demand from

B2B customers (25%).

All this has sparked increased awareness among most businesses polled about the

importance of strategic credit risk management in B2B trade, with one in two

companies across the markets polled expressing interest in insuring B2B trade

receivables to mitigate the impact of customer credit risk on the business.

Andreas Tesch, Chief Market Officer of Atradius, commented: "The outlook for

growth in Asia remains relatively robust at around 5% in both this year and

2023. But many of the region's businesses operate across the world in the

current deeply unsettled period, where the ongoing impact of the pandemic and

geopolitical upheaval has meant a downward revision of the outlook for global

growth to just above 3%. Companies in Asia are feeling the pinch from this

widespread disruption in the global trading arena. Facing the increase in bad

debt write-offs can be a warning sign of a business environment under financial

stress. This certainly explains why the need for strong strategic credit

management was seen to be a crucial theme throughout our survey across the

region's major economies."

Roeland Punt, Atradius Regional Sales Director for Asia, added: "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. 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

(https://group.atradius.com/publications/payment-practices-barometer/asia-2022-concern-over-upward-trend-of-bad-debt-write-offs.html) edition can be downloaded from the Atradius website at Atradius Group website

( https://group.atradius.com/ ) (Publications section (https://group.atradius.com/publications/ )).

It further provides in depth

analysis of how businesses in key markets in Asia Pacific manage payment

default risks related to selling on credit to B2B customers. Topics covered

include: payment terms, the time it takes to collect invoices, managing payment

delays, the impact of payment delays on business, and expected business trends.

About Atradius: Atradius is a global provider of credit insurance, surety and

collection services, with a strategic presence in over 50 countries. The credit

insurance, bond and collection products offered by Atradius protect companies

around the world against the default risks associated with selling goods and

services on credit. Atradius is a member of Grupo Catalana Occidente (GCO.MC),

one of the largest insurers in Spain and one of the largest credit insurers in

the world. You can find more information online at https://group.atradius.com.

For further information:

Atradius Group Website ( https://group.atradius.com/ )

www.atradius.com.hk

Connect with Atradius on Social Media:

Twitter ( https://twitter.com/atradius )

LinkedIn ( https://www.linkedin.com/company/atradius/ )

YouTube ( https://www.youtube.com/user/atradiusgroup )

SOURCE Atradius N.V.