B2B payment practices trends, Singapore 2024

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

27 Sep 2024

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Steady payment patterns hide credit risk challenges for Singapore companies

Our survey finds a cross-section of experiences among companies in Singapore about the current state of B2B customer payment behaviour. For most businesses, particularly in the chemicals sector, payment practices have remained consistent during the past year. However, this apparent stability masks deeper issues because many companies are dealing with persistent late payments, and indicates that underlying issues need to be addressed. Alongside this, a notable deterioration in customer payment behaviour is reported in the electronics/ICT industry. The overall payment landscape is further complicated by more companies experiencing longer payment cycles than shorter ones. These findings indicate a troubling trend in the business environment.

It is clear that late payments are increasingly becoming a major concern across different industries in Singapore. They now impact an average 54% of credit sales to B2B customers, putting a strain on cashflow and financial stability for many companies. This worrying trend is exacerbated by survey findings that reveal bad debts written off as uncollectable now stand at an average 4%of all B2B credit invoices. These bad debts result not only in lost revenue, they also limit funds for operations and production, as well as increasing fixed costs. All of this can significantly strain the overall financial health of a business.

Pessimism about insolvency risk among Singapore companies

ur survey finds a mixed mood about prospects for many indicators among companies in Singapore. For example, 38% of businesses expect B2B customer payment behaviour to show no significant change in the year ahead, while an almost equal number anticipate an improvement in payment practices. However, many in the construction believe there is likely to be a deterioration in payment behaviour. They also fear a worsening of Days Sales Outstanding (DSO) during the coming months, which could strain cashflow and financial stability. In contrast, most electronics/ICT companies foresee an improvement in debt collection efficiency, while many others expect stable DSO as they focus on effective management of customer credit risk.

Summary

There is a mixed picture of B2B customer payment behaviour reported by companies in Singapore. The majority say it has remained consistent during the past year, although this appears to mask deeper issues. Many electronics/ICT businesses tell us payment practices have worsened, and only a minority see improvement.
Late payments are an increasing concern for Singapore businesses across all sectors. They currently affect an average 54% of all B2B credit sales, putting a strain cashflow and financial stability. Bad debts written off as uncollectable now stand at an average 4% of all B2B invoices.
A wide range of opinion on prospects for B2B customer payment behaviour is found among companies in Singapore. 38% expect no significant change in the year ahead, and an almost equal number anticipate improvement. However, many construction businesses foresee a deterioration in payment practices.