Singapore: businesses face worsening payment practices

In Singapore, companies face worsening B2B payment behavior Singapore: businesses face worsening payment practices Singapore’s economy is strongly dependent on international trade and highly integrated in the Asian supply chain. This makes it highly vulnerable to changes in the global trading environment Introduction As a small city-state, which is the main transport and financial service hub for Southeast Asia, Singapore’s economy is strongly dependent on international trade and highly integrated in the Asian supply chain. This makes it highly vulnerable to changes in the global trading environment. Key takeaways from the report Although many more respondents to the Payment Practices Barometer survey in Singapore reported late payments than last year, and a significant percentage of these were long overdue, both performance indicators are better than the regional average. That said, Singapore businesses report a heightened perception of credit risk and almost all of the businesses surveyed are taking steps to minimise these. Credit risk reduction techniques favoured by respondents to the Singapore survey include reducing single-buyer concentrations, letters of credit, payment guarantees, selfinsurance and trade credit insurance. There was an increased preference for cash sales over trade credit, but the fact that as much as two thirds of the sales to B2B customers were made on credit, including within the domestic market, may suggest B2B buy-ers need suppliers’ help to provide shortterm trade financing. Against this virus-tinged backdrop of reduced business confidence is the widely expressed opinion that the government stimulus packages will help support the economy and business liquidity. Key survey findings for Singapore Heightened perception of B2B trade credit risk, particularly in the domestic market Longer payment terms reflect importance of trade credit as source of short-term finance Significant focus on strengthening B2B credit risk management processes Sharp increase in business insolvencies expected this year Half of Singapore businesses anticipate dependence on bank finance in coming month Interested in getting to know more? For a complete overview of the payment practices in Singapore and in the agri-food, chemicals and construction industries in Singapore, please download the complete report.