Payment delays in Asia have increased and as the region learns to cope with business disruptions caused by the coronavirus pandemic, in some countries volumes of letter of credit (L/C) business look likely to increase according to new economic research by trade credit insurer Atradius.

In a survey conducted in March this year for the credit insurer's Payment Practices Barometer, Atradius found that businesses in Asia reported more than half of B2B invoices were paid late, a considerable spike compared with 30 per cent late payments reported a year ago.

Some countries are likely to turn more to L/Cs according to the Payment Practices Barometer which measures the changing pattern of payment behaviour in B2B trade.


The credit insurer says businesses in India predict an increase in reliance on bank finance in the coming months.

They may also use some combination of pre-credit assessment checks of all customers, discount incentives for early settlement of invoices and payment guarantees, including L/Cs, credit insurance and payment bonds.


Bank guarantees and L/Cs are frequently used by businesses in the UAE to mitigate the risk of non-payment. However, Atradius reckons that with more payment defaults anticipated, businesses in the UAE might benefit from further enhancing their credit management processes.

Enhancements could include a regular and structured approach to pre-credit checks, regular monitoring of buyers' risks and outsourcing invoice collection to a professional agency.


Credit risk reduction techniques favoured by respondents to the Singapore survey include L/Cs.

Other techniques favoured in Singapore include reducing single-buyer concentrations, payment guarantees, self-insurance and trade credit insurance.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.