B2B payment practices trends, Taiwan 2024

Reports

Our survey of companies in Taiwan reveals key insights into current B2B corporate payment trends. Explore emerging dynamics that could shape the future of business transactions.

Silvia Ungaro

Senior Advisor

26 Sep 2024

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Taiwan companies shift to more effective credit management strategies

Late payments remain a significant problem for many businesses in Taiwan despite our survey showing relatively steady payment practices among B2B customers. An average 56% of B2B invoices issued in trading on credit are currently overdue, with companies in the electronics/ICT industry especially affected and some feeling financial strain. There is a different picture with bad debts, which are decreasing to now stand at an average 2% of all B2B invoices. This chimes with the survey finding that four in five Taiwan companies report no significant change in B2B customer payment behaviour during the past 12 months.

Delays in the customer payment process and B2B customer cashflow issues are the main reasons for late payments, and overdue invoices are now cashed in on average one month after the due date. 43% of companies in Taiwan, notably in the automotive sector, tell us they respond by delaying payments of bills and/or staff, while businesses in the electronics/ICT industry say it causes them difficulty in meeting financial obligations. 60% of companies, particularly in the chemicals sectors, bridge potential liquidity bottlenecks by relying on internal funds. Businesses also look to external finance strategies such as supplier credit, bank loans and invoice financing.

Half of Taiwan companies fear a surge in insolvencies

Payment practices are expected to show a favourable trend, with 46% of companies in Taiwan telling us they foresee an improvement during the year ahead. There is particular optimism in the automotive sector. Around half of businesses say they do not foresee any significant change in B2B customer payment behaviour, while only a tiny minority fear any worsening. Similar optimism surrounds the outlook for Days Sales Outstanding (DSO), with 64% of companies expecting no significant change, and 25% an improvement in debt collection efficiency. This positivity is most likely explained by a broader strategic approach to credit risk management.

Summary

The vast majority of companies in Taiwan report no significant change in B2B customer payment behaviour during the past year. Four in five businesses tell us payment practices remain steady, while the rest are evenly split between those reporting faster or slower invoice payments.
Despite this, late payments continue to be a significant issue for Taiwanese companies. Currently, an average of 56% of B2B invoices are overdue, a particular problem in the electronics/ICT sector. In contrast, there is a favourable trend in bad debts, decreasing to an average 2% of all B2B invoices.
There is a positive mood about prospects for B2B customer payment behaviour with 46% of Taiwan companies expecting an improvement in the year ahead, especially in the automotive sector. No significant change is anticipated by 50% of businesses, while only a small minority foresee any deterioration.