B2B payment practices-trends, Vietnam 2024

Vietnamese companies struggle with mixed B2B payment behaviours  

Concern about late payments from B2B customers is evident in our survey of companies in Vietnam, particularly those across all industries who report a deterioration during the past year. This is causing cashflow challenges and financial strain. A negative impact is also being felt by many businesses in the agri-food sector even though the majority of them report no significant change in B2B customer payment behaviour. This is probably because the sector’s slower baseline speed for invoice settlements results in a higher rate of late payments. 40% of companies, mostly in the chemicals and packaging sectors, report an improvement in payment practices of B2B customers. 

The mood of anxiety about payment practices is highlighted by a slight increase in the level of late payments. Businesses in Vietnam report that these now affect an average 36% of all B2B invoices, with the agri-food sector hardest hit. Bad debts written off as uncollectable now stand at an average 3% of all B2B invoices, with the agri-food industry again the most affected. Customer cashflow problems and administrative inefficiencies are cited as the main reasons for late payments, especially in the chemicals and plastic/rubber industries. It now takes an average one month beyond due date for Vietnam companies to convert invoices into cash, with a consequent impact on financial stability and operational efficiency. 

Future profitability and insolvency risk worry Vietnam’s businesses 

A strong mood of optimism about the prospects for B2B customer payment behaviour is evident in our survey of companies in Vietnam. 72% of businesses say they anticipate an improvement in payment practices, with the rest equally split between those foresee no significant change and companies who expect a deterioration in payment timings during the coming year. It is no surprise that this positivity also means 67% of Vietnam businesses, especially in the plastic/rubber sector, believe there will be an improvement in Days Sales Outstanding (DSO) in the months ahead. 25% of companies, mostly in the packaging industry expect no significant change in DSO, and only a minority fear any deterioration.