For global traders, emphasis continues to be placed on the urgency for corporates in a strong financial position to support their supply chains through on-time — and in some cases even accelerated — payments to suppliers.
B2B Data Digest looks at the latest news in how businesses are responding to that call.
Continuing past trends, the food and grocery arena appears to be responding quickly to the need to support its vendor base. Conversely, the apparel and fashion industry could be headed for a crisis with billions of dollars lost to vendors.
As a result of this cash flow crunch, Mitsubishi UFJ Financial Group (MUFG) Head of Supply Chain Finance Maureen Sullivan recently said in a public statement that demand for trade finance is on the rise, with delayed B2B payments only part of companies’ current cash flow struggles.
“In some cases, excess demand for certain goods has been overburdening suppliers’ production capacity and draining them of working capital,” she said in the statement. “In other cases, lower demand for goods has been causing income shortfalls. And physical disruptions in the manufacturing or delivery of goods have been delaying payments.”
Recent research finds that this is a growing issue in Asia, with Bangladesh a home base for much of the world’s fashion supplier ecosystem. Elsewhere in the region, analysts warn of a deterioration of B2B payments practices in the United Arab Emirates (UAE), and a rising demand for trade credit in markets like China and Taiwan.
30 percent of B2B customers in the UAE say they need to delay payments to suppliers, according to new Atradius data. The firm’s latest Payment Practices Barometer warned that 53 percent of UAE respondents say they are concerned about a deterioration of B2B payment practices as more suppliers expect to be paid late themselves. According to researchers, these findings are especially troubling when taking into account that the UAE has the longest average B2B payment terms of any other market analyzed in Asia at 57 days.
Source: PYMNTS article