Singapore Atradius recently released its latest Payment Practices Barometer for Singapore 2021. The survey shows the ‘scale of business stress as experts warn there may be worse to come’. It has also reportes Singapore late payment situation has worsened this year.
With the on-going pandemic, the Singapore government has been rolling out multiple stimulus packages to help Singapore climb out of its steepest recession in history. In the 2021 budget alone, SGD67.5 billion was set aside to support the COVID-19 economic recovery. Despite all this, the sentiment among businesses is generally positive. Half of all Singapore businesses are optimistic about the improvement in their business performance over the next 12 months. 32% of surveyed businesses believe that the combination of healthier export flows and a domestic rebound will help with their business recovery.
Singapore B2B sales
Singapore B2B sales are transacted on credit more than any other country in Asia at 59%. The main reason for this is to help their business stay competitive in the market (24%). In addition, it is to provide their customers with quasi short-term finance (20%) by allowing their customers a longer time to pay while they are waiting payments from their own customers. Lastly, it is to help win new customers (20%).
The survey also found that 43% of the businesses surveyed are of the opinion that selling on credit to B2B customers will become an increasingly widespread business practice over the next 12 months.
Top 3 B2B credit sales by industry
- Construction, 68%
- Chemicals, 60%
- Agri-Food, 57%
SME top 5 profitability challenges
Below are challenges that Singapore SMEs are facing that effects their profitability.
- Maintaining adequate cash flow, 32%
- Containment of costs, 23%
- Economic crisis due to the coronavirus pandemic, 13%
- Falling demand for your products and services, 9%
- Pandemic-induced supply chain disruptions, 9%
- Other, 14%
Liquidity challenges among SMEs
Based on the survey, 32% of Singapore businesses expressed liquidity concerns (compared to 26% in Asia). 27% are concerned about maintaining cash flow in the coming months, (compared to 24% in Asia). 25% of respondents were worried about containing credit management costs (compared to 21% in Asia). Twice as many respondents in Singapore than in Asia are worried about their ability to access much-needed cash to help cope with the economic uncertainties as banks are expected to increase restrictions on lending.
To minimise their cash flow challenges, businesses have taken steps to strengthen their account receivables by:
- Conducting stringent credit assessment on their customers
- Increasing bad debt cash reserves
- Opting for credit insurance solutions to minimise bad debt exposure
Singapore Late Payment Amongst B2B
According to the latest Atradius Singapore Payment Practices Barometer survey, 52% of Singapore businesses are experiencing increase in payment delays. These overdue invoices were settled on average within one month past due, longer than last year’s 22-day average.
If your business is experiencing delays in payment and is affecting your cash flow, Invoice Finance could be the solution for you. You could sell your outstanding customer invoices to a financier like InvoiceInterchange and have funds in your bank account within 24 hours, rather than waiting 30, 60 or even 90 days for your customers to pay. Speak to one of our friendly team members today to find out more.
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