Singapore: signs of market stress among businesses

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2021/06/16

Many more businesses in Singapore than in the rest of Asia expressed liquidity concerns over the coming months.

Introduction

As the Singaporean government continues to phase out the temporary fiscal measures  introduced to support industries through the pandemic, local businesses appear to be very receptive to the use of customer credit riks managment tools aimed at protecting accounts receivable from the risks associated with the 2021 projected uptick in insolvencies.

The Atradius Payment Practices Barometer provides us with the valuable opportunity to  hear directly from businesses how they are coping with changed trading and economic  circumstances caused by the pandemic. The survey questionnaire was completed by   businesses in Singapore during Q2 2021, a full year after the World Health Organisation declared Covid-19 a global pandemic.

Key takeaways from the report

Acting as the main transport and financial services hub for Southeast Asia, Singapore punches well above its weight in the global economy. However, the city-state’s leading status has also meant it has been vulnerable to pandemic-induced supply chain  disruptions and global demand contractions.

Our Payment Practices Barometer survey point to some evident signs of market stress among Singaporean businesses. These include a reported increase in bad debts and an in late payments from B2B customers. As a consequence businesses in Singapore told us they were worried about maintaining adequate cash flow over the coming months.

However, Singapore is one of the world’s strongest economies and a strong rebound is projected for 2021. What remains to be seen is the full impact of the removal of government support over the course of this year, particularly in terms of customer credit risk trend. Within an environment of increased risk, successful businesses will take steps to protect their account receivables and with these the profitability of the business.

Key survey findings for Singapore

  • Singapore sells on credit terms more often than any other economy in Asia, most often to gain a competitive edge
  • Payment terms offered by Singaporean businesses did not change significantly over the past year
  • Late payments affect over half of all B2B sales
  • Businessess who do not outsource collections observe more bad debt challenges
  • Liquidity issues and cost containment top future business concerns
  • Looking ahead, businesses in Singapore appear to be far more optimistic than Asian peers as to improvement in business performance chiefly stemming from domestic economic
    rebound

Interested in getting to know more?

For a complete overview of the payment practices in Singapore and in the local agri-food, chemicals/pharma and construction industries, please download the complete report.

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