Despite improvements, payment delays still haunt Chinese firms: survey

The average payment delay in China fell to 64 days last year from 83 days in 2022, down from 74 days for Hong Kong companies, 70 days for Malaysian businesses, 64 days for companies in Thailand and 66 days for companies in India.

The delay in China, however, was still higher than Singapore’s 63 days, Taiwan’s 53 days and Japan’s 50 days, the survey showed.

The annual payments survey, covering over 2,400 companies in the Asia-Pacific region, was conducted between December and March.

It showed that 60 percent of companies in the region reported late payments last year, up from 57 percent in 2022.

However, the report found an overall improvement in payment delays, with the exception of the textile and construction sectors.

“Private business owners like me are struggling because the entire industry, from upstream and downstream, is facing overcapacity,” said Guangdong-based textile equipment integrator Yao Ke.

Revenue this year is expected to double to more than 300 million yuan (US$41.4 million) from a year ago, but 40 million yuan in accounts receivable — money owed for goods or services that have already been provided — and several months payment terms suggest a possible cash flow risk.

“There are only two ways to play the game: either give up profit and significantly lower prices to maintain cash flow to keep the factory running, or offer extensive credit sales to increase orders,” he added. .

Yao has already reduced the price of its products by up to 15 percent compared to last year, while offering some regular customers a maximum credit period of 120 days.

“These companies with increased performance actually have high risks because they obviously offer credit sales on a large scale to increase orders, but the risk of a disruption in the capital chain is also high,” said Peng Biao, a textile and apparel supply chain. specialist

Peng said most Chinese textile manufacturers are more careful with payment terms, preferring to check the payment period between 30 days and 45 days for foreign customers and between 60 days and 90 days for domestic customers, even if it means receiving less or no news. orders.

The Ministry of Industry and Information Technology is seeking public opinion on the revision of the Regulation on Payment Assurance for Small and Medium Enterprises, promising to address “chain debts”.

In the draft amendment, large enterprises are required to make timely payments to small businesses, while large listed companies must disclose late payment information to small and medium-sized enterprises in their annual reports.

Data from the National Bureau of Statistics showed that in the first three months of the year, the cost per 100 yuan of business revenue for large-scale industrial enterprises with annual revenue above 20 million yuan was 85.18 yuan, representing a year after – annual increase of 0.16 yuan.

Meanwhile, the average collection period for accounts receivable was 67.3 days, representing a year-over-year increase of 3.8 days.

At the end of March, accounts receivable for large-scale industrial enterprises had reached 23.33 trillion yuan ($3.2 trillion), representing a year-on-year increase of 8.2 percent, while finished goods inventory was 6.26 trillion yuan . , representing an increase of 2.5 percent.