Companies limit trade credit as bad debts rise

Bad debts surged to an average of 6% of B2B invoices.

More businesses aren’t getting paid by their corporate clients, with unpaid invoices now averaging 6% across industries.

Unpaid invoices, or bad debts, are “losses which erode margins and point to underlying financial vulnerability,” Atradius said in its B2B Payment Practices Trends in Singapore 2025 report.

The report found that construction and agri-food had the highest average bad debt, at 7%, while energy and fuel averaged 5%.

Rising bad debt is prompting half of Singapore companies to limit trade credit to corporate clients, with the rest tightening payment terms, Atradius said.

Those that extend more credit are also tightening payment terms.

Currently, 54% of B2B sales are on credit, averaging 46 days for payment. Overdue invoices account for 35% of credit sales, primarily due to client liquidity issues and disputes.

Trade credit use is highest in energy and fuel (58%) and construction (55%) sectors, while agri-food trails at 47%.

Agri-food, however, struggles the most with late payments, with 43% of invoices overdue, higher than the construction (37%) and energy and fuel (30%) sectors.

In the near term, seven in 10 firms expect insolvency rates among corporate clients to remain unchanged, pointing to persistent financial risk.

Most are stepping up collection efforts to protect cash flow.
About 62% aim to shorten Days Sales Outstanding to improve liquidity, though flat inventory turnover may limit cash release.

With 70% of companies facing supplier pressure for faster payments, liquidity stress is building in the supply chain.

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