Only 14% of firms use advanced analytics to assess payment risks

Most expect payment terms to remain unchanged despite rising delays.

Only 14% of firms in Hong Kong use highly structured, analytics-led approaches to assess customer payment risks, compared with 31% across the Asia Pacific (APAC) region, according to a Coface survey.

The report found that most respondents (93%) experienced late payments over the past 12 months, whilst half expect payment conditions to deteriorate over the coming year.

Despite this, 60% expect their payment terms to remain unchanged, whilst only 32% reported becoming more cautious over the past year, compared with 48% across APAC.

Coface said Hong Kong firms take an average of 144 days from product delivery to final payment collection. The period exceeds 160 days in sectors such as transportation, energy, and agriculture.

Around four in 10 also reported that payment delays had become more frequent and severe compared with the previous year.

Approximately 73% of respondents said long-standing customer relationships influence how much late payment they tolerate.

This was particularly common in the energy and automotive sectors, both at 83%, followed by transport and logistics at 77%, and construction and real estate at 71%.

Long-standing relationships are a strength of doing business in the city, yet trust and strong payment history do not reflect a customer’s financial position today, said Chris Murphy, general manager for Hong Kong at Coface.

“In an environment where payment delays are increasingly becoming the norm, businesses need to complement trust with timely financial information and closer monitoring of payment behaviour,” Murphy added.

The report found that 83% of firms use financial information to some extent when assessing customer payment risks. However, only 35% said it strongly influences their assessments, compared with 43% across the region.

Junyu Tan, regional economist for North Asia at Coface, said Hong Kong's economic recovery has not translated into better payment behaviour.

“The economic recovery is real, but it remains narrowly based. Financial services and electronics re-exports are doing well, but they have weak spillover to the broader economy and re-export trade tends to generate thin margins,” Tan said.

The survey was conducted in March and April, covering 2,800 finance professionals across 10 APAC markets, including 161 respondents in Hong Kong.