SINGAPORE - As outstanding invoices continue to increase in Singapore, it has become more likely for local companies to issue final demand letters to remind customers to settle their debts.
As many as 33 per cent of respondents in a study by Atradius Collections said that it was 'highly likely' for them to use such letters to get customers to settle their unpaid invoices.
Another 33 per cent also said it was 'likely' for them to do so.
According to the Atradius 6th Global Collections Review, more Singaporean companies have become open to outsourcing their debt collections to third parties.
Since 2009, global B2B debt collections specialist Atradius Collections has conducted and released the review to provide decision-makers in the credit management industry with an understanding of the dynamics and differences in collections practices by country and region.
The latest edition has been expanded and now includes data on two new countries - India and Turkey. In total, the Global Collection Review now covers 29 countries and is the most extensive version ever.
Says Michael Frigo, Country Manager for Atradius Singapore: "Like the rest of the Asia Pacific, Singapore is experiencing an increase in the amount of uncollected invoices.
"The survival of a company will depend on how well it can collect the debt of its partners without ruining long-standing business relationships. Engaging an experienced third party may be one of the solutions that these local companies need," he added.
The report showed that 54 per cent of all B2B transactions made by companies in Singapore were based on credit.
When selecting a debt collection agency, 'success rate' and 'reputation' were the most important criteria.
Aside from maintaining 'customer relationship', 'cost' was cited by companies as one of the main reasons why they choose not to engage the assistance of a debt collection agency.
Companies also made 54 per cent of their transactions value on credit terms. Only 3 per cent of the respondents claimed to sell on cash basis.
Over 70 per cent of the companies using debt collection agencies report that they co-operate only with one agency, whereas the remaining companies used two or more simultaneously.
When choosing debt collection agencies, the most important criteria cited by Singapore companies was 'success rate' followed by 'reputation'.
The Global Collections Review reveals that businesses in the Asia Pacific region were most likely to employ collections agencies.
When comparing countries in the region, China and Indonesia were the most likely, with 56 per cent and 44 per cent of businesses saying they would do so.
While China is 4 per cent less likely to hire debt collection agencies as compared to the previous year, it still has the region's highest figures for employing an external debt collections agency.
Indonesia, on the other hand, has seen an increase of 3 per cent, making it the Asian country second most likely to employ a debt collections agency.
The survey for the Global Collections Review was conducted with participation of almost 6,000 businesses in 29 countries worldwide.