The economic effects of extended lockdowns are beginning to be felt. With so much uncertainty, it’s hard to predict the impact on B2B commerce. As business leaders, one can only show a bold face,express optimism towards a better future and work with teams towards faster recovery.
While economic pundits are challenging the demand & supply theory, one of the early indicator across businesses is evident – cash flow is going to get impacted. External money sources are tightening which leaves many companies to focus on receivables as its most valued tangible asset.
Given Kapittx experience working with B2B companies and studying various India as well as global reports, it is important we understand accounts receivable facts to manage it better. Most of the data points are pre Covid-19 and way forward, statistics may not look that favorable.
- Most medium to large enterprises extended relaxed payment terms. Average Days Sales Outstanding ( DSO ) in India is close to 70 days.
- India has the highest DSO in Asia Pacific. On an average, 55% of the total value of B2B invoices in India were reported to be paid late ( Atradius )
- 61% of late payments are due to compliance or administrative problems such as incorrect invoices or receiving the invoice too late to process payment on established credit terms ( Credit Research Foundation )
- 27% of Financial executive stated that customers didn’t pay of time because they either didn’t have the money or they were unable to contact the customer to resolve the issue ( CFO.com )
- 26% of invoices over three months old are uncollectable. This increases to 70% uncollectable at six months and 90% uncollectable at 12 months ( US Census Bureau ). Kapittx experience indicates India numbers are not that different.
- 94% of respondents in India reported late payment of invoices by domestic and foreign B2B customers ( Atradius )
- 60% customers pay on time or closer to due date because they were reminded and their invoices related issues were resolved on time.
- 2 in 5 Indian suppliers wrote off receivables as uncollectable due to high collection costs ( Atradius )
- Across industries, with 2.7% to 4% of topline being uncollectable, India is one the country with highest proportion of B2B receivables written off as uncollectable.
- As a consequence of late payment by B2B customers, 45% of suppliers surveyed in India reported they had to take specific measures to correct cash flow. ( Atradius )
We at Kapittx enable your collection teams and sales teams to collect payment faster and more efficiently than before. Request for a demo now and experience how Kapittx will speed up the payments and reduce DSO by more than 25%.
Kumar Karpe Co-Founder and CEO, Kapittx