Coface’s 2025 survey warns of deteriorating payment behavior across Asia-Pacific due to rising uncertainty and financial strain
Asian businesses brace for financial turbulence
According to Coface’s 2025 Asia Payment Survey, economic uncertainty and geopolitical tensions are pushing businesses across Asia-Pacific into defensive mode. Over half of the surveyed companies expect a deterioration in payment behavior, while 40% have already experienced ultra-long payment delays (ULPDs)—payments overdue by more than 180 days and worth over 2% of their annual revenue.
The survey covers 2,400 companies from 13 sectors across nine markets, including China, India, Malaysia, and Japan, revealing growing concerns over liquidity and credit reliability in the region.
Payment terms remain tight despite slight increase
Average payment terms rose slightly from 64 days in 2023 to 65 days in 2024, still below the 2018–2022 five-year average of 69 days. Sectors such as automotive, textiles, and chemicals showed the largest increases, with competition forcing dealers to offer more flexible credit conditions.
Looking ahead, two-thirds of businesses plan to shorten payment terms, prioritizing liquidity preservation in an increasingly unstable global environment.
ULPDs hit record high: 40% of firms affected
Although average payment delays remained steady at 65 days, the proportion of firms facing ULPDs skyrocketed—from 23% in 2023 to 40% in 2024. This trend poses a severe risk, as Coface estimates that 80% of such payments are never recovered.
The highest concentrations of ULPDs were reported in China, India, Thailand, and Malaysia. Every sector experienced growth in ultra-long delays, with wood (+37%), agri-food (+20%), and automotive (+18%) being the hardest hit.
This worrying trend is expected to continue into the second half of 2025, with 57% of businesses anticipating longer payment delays.
Asia’s economic outlook weakens for 2025
Coface has downgraded its Asia-Pacific GDP growth forecast to 3.8% for 2025. The region’s recovery in 2024 was modest, barely making up for the decline in 2023. Mounting tariffs, shifting trade policies, and escalating geopolitical risks have shaken business investment and consumer confidence.
A third of respondents foresee a deterioration in economic conditions this year, more than double the rate recorded in the 2024 survey. Taiwan and Singapore are the most pessimistic markets, with over 40% of firms expecting weaker activity.
Companies shift focus to risk mitigation
“As growth slows and trade becomes more volatile, companies will increasingly prioritize credit management and cost control,” said Bernard Aw, Coface’s Chief Economist for Asia-Pacific.
Ernesto De Martinis, CEO of Coface for the Mediterranean & Africa, added: “This survey confirms rising payment risks in Asia, driven by economic uncertainty, geopolitical tensions, and pressure on margins. Businesses must reinforce risk monitoring and adopt preventive strategies to safeguard cash flow.”
FAQ
1. What are ultra-long payment delays (ULPDs)?
These are payment delays exceeding 180 days and representing more than 2% of a company’s annual revenue.
2. Why are ULPDs a red flag for businesses?
Because 80% of these payments are typically never recovered.
3. Which industries are most affected?
Wood, agri-food, and automotive sectors saw the largest ULPD increases.
4. Why are payment terms rising?
Fierce competition, especially in automotive and textile sectors, encourages more credit flexibility.
5. Which countries show the highest ULPD levels?
China, India, Thailand, and Malaysia.
6. How are companies responding?
By tightening credit terms and focusing on liquidity protection.
7. What’s the 2025 outlook for Asia?
Lower GDP growth (3.8%) and worsening payment behavior.
8. How do tariffs and trade policy affect payments?
They increase uncertainty, reducing investment and delaying payments.
9. What does Coface recommend?
Stronger credit risk management and liquidity monitoring.
10. Are these risks uniform across Asia?
No, they vary by country and industry.
Leave a Reply