APAC companies more proactive with overdue receivables
The October 2015 edition of the Global Collections Review, a survey of B2B suppliers,
reveals that companies in the Asia Pacific region have a different approach towards the
management of overdue receivables compared to their European peers. Companies in Asia
Pacific react sooner to delayed payments and are willing to use additional methods to
On average, 2.0% of the total value of the B2B receivables in Asia Pacific was written
off as uncollectable, whereas in Europe the uncollectable rate was significantly lower
(1.2%). Companies located in Asia Pacific appear to be more results driven especially when
it comes to cooperating with a debt collection agency. They are also willing to work with
more debt collections agencies simultaneously compared to those in Europe and the Americas
(where the loyalty rate is, on average, around 80%).
Raymond van der Loos, Managing Director Atradius Collections commented: "The economic
growth in China is cooling down further, which impacts the entire Asia Pacific region, as
there are strong regional interrelationships in supply chain trade. Measures are being
implemented, which are restricting access of corporations to bank financing. Consequently,
it is becoming more difficult for companies in China and Asia Pacific to obtain the
required working capital for their day-to-day business operations. The number of defaulted
payments in the region has increased and there is a rising trend of business fraud.
Companies are reacting to this by submitting their outstanding receivables to collection
agencies at an earlier stage."
Compared to their peers in Europe and the Americas, almost 50% of companies submit
their past due receivables for debt recovery earlier than 90 days past the due date. In
terms of export debts, companies in the Asia Pacific region are lacking the experience,
knowledge and execution capability to recover receivables themselves. Therefore, they are
looking for a reliable international expert, who can collect their outstanding receivables
while maintaining the relationship with the customer.
This is also mirrored in the openness shown towards the additional services offered in
the collections market. A high interest has been observed in first party collections
services and the use of the final demand letter before handing over the overdue
receivables to debt collection agencies. Especially China, Indonesia and India show a
great interest in using these services in the near future to put pressure on their
customers. Tony Au, Regional Head of Atradius Collections Asia Pacific, explains:
"Business relationships in Asia are mainly built on trust. As there is an upward trend in
business fraud, it is crucial to check if the actual business is genuine early in the sale
process. Invoice verification supports companies to prevent fraud by checking with the
buyer whether he acknowledges the business invoices. The final demand letter creates an
early trigger for customers to pay their invoices by notifying them that if they don't pay,
they will be handed over to a debt collection agent."
The complete report highlighting the survey findings of the 2015 Global Collections
Review can be found in the Updates & Publications section of the