SME Asian export payment pressure

Exporting to Asia is likely to become a more risky business, and it is SMEs that are likely to pay the price, according to a new report by Dun & Bradstreet Australia.

The report reveals that debtor days for some of Australia’s biggest export partners in the region are leaving Australian exporters in the lurch waiting to be paid. India is the worst offender, with 55.9% of payments made more than 30 days past standard terms, followed by New Zealand on 40.6%, The Philippines on 39.1% and Malaysia on 38.6%.

The report argues that SMEs, which comprise 80% of Australia exporters, will be hardest hit because of their more vulnerable market position compared to bigger businesses.

“Risk is greatest for small and medium sized exporters who don’t have a dominant market position and are reliant on a small number of overseas customers,” says Christine Christian, the chief executive of Dun & Bradstreet Australia.

And the risks faced by exporting SMEs are likely to get even tougher, the report finds, with the fallout from the sub-crisis in the US likely to feed into a global contraction if the consumer demand fuels economic growth in many Asian countries.

For Australian exporters this may mean having to wait even longer for payment from overseas customers partners, Christian says.

“Australia would suffer the flow-on effects of this trend as export markets in the Asia-Pacific region are forced to rein in spending or delay payments to trade partners as a means of managing reduced US demand on their operations,” Christian says.