Overview of payment practices

By industry



Indonesia’s agri-food sector has proven to be one of the most resilient industries amidst the coronavirus pandemic, with rising output last year. Interestingly, a larger part of Indonesia’s agri-food output has been sold on credit on export markets over the past year, than we have seen among Asian countries overall.

This may explain why the Indonesian

agri-food industry appears to be more impacted by late payments from foreign customers than the industry in Asia. Although trading on a cash basis with B2B customers is still favoured by Indonesian agri-food businesses, credit terms are more frequently offered to stimulate demand and support the gradual recovery of the domestic economy.

Strong trade debt collection results in lower DSO than regional average

54% of the total value of B2B credit sales is overdue (higher than the 49% average for Asia). This may be a reflection of some differences in trade debt management between businesses in the Indonesian agri-food industry and their peers in the region. 6% of the total value of B2B receivables was written off as uncollectable.

This is consistent with the average for the region. nearly 70% of agri-food businesses in Indonesia (regional averages: 50%) spent more time, costs

and resources on chasing unpaid invoices and tightening their credit control processes last year. However, survey findings suggest that businesses in the Indonesian agri-food industry are more successful than their regional peers at collecting long-term overdue invoices (over 90 days overdue) of high value due. This correspondingly has a positive effect on DSO, resulting in an 85-day average DSO, far lower than the 119- day average for the industry in Asia.

Cash is king when trading with foreign customers

The Indonesian agri-food industry appears particularly risk averse when trading with foreign customers. 62% of Indonesia’s agri-food industry prefers to sell on cash terms in foreign markets, contrasting with the Asian average of 51%. However, when they do offer trade credit, the sector’s businesses told us they apply a wide range of credit management techniques and tools to minimise risk.

These range from the reduction in reliance on a single buyer, to the adjustment of credit terms, the use of outstanding invoices reminders and the employment of external debt collection agencies. These appear to be applied more often by businesses in the agri-food industry in Indonesia than by their industry peers in Asia.


of the total value of B2B credit sales is overdue (higher than the 49% average for Asia).

Atradius Payment Practices Barometer – June 2021



Similar to the agri-food industry, Indonesia’s chemicals/pharma industry has also proved to be rather robust amidst the coronavirus pandemic. consistent with the chemicals/pharma industry in Asia, just over half of the sector output is sold on credit terms, with china being the main export market. Although

cash is preferred more often than the Asian average, credit is increasingly used to encourage repeat business. To minimise credit risk, businesses in the chemicals/pharma industry favour the use of credit insurance over retaining and managing the risk in-house.

Late payments and write-offs lower than in Asia

50% of the total value of B2B credit sales is overdue (regional average: 54%). 4% was written off as uncollectable. This is lower than the 7% average for Asia. Despite this positive result, chemicals/pharma businesses were less efficient at collecting long-term overdue invoices of high value (over 90 days overdue). 50% of respondents reported less effective trade debt collection and

increased DSO over the past year (regional average 39%). This is reflected in the DSO results, which reveal a 105-day average for the industry in Indonesia, compared to a 95-day average for Asia. However, this could also be due to a more liberal trade credit policy during the pandemic and to fluctuations in sales patterns.

Trade credit insurance used more widely than Asian average

Significantly more chemicals/pharma businesses in Indonesia (67%) than in Asia (57%) told us they used credit insurance. 66% of businesses also told us they opted to manage credit risk themselves through self-insurance, (regional average: 70%). The credit risk management techniques they

employed included the adjustment of payment terms to account for credit risk profiles, discounts for early payment and in-house debt collection. 68% of businesses in Indonesia requested payment in cash (regional average: 58%).



Businesses in the consumer durables industry in Indonesia appear to be far more worried than their industry peers in Asia over the outlook for the pandemicinduced economic crisis. This is likely to be due to the pandemic’s negative impact on private consumption, one of the key growth drivers for the consumer durables industry.

However where there are expectations of an improvement in sales and profits, chiefly due to a rebound of the domestic economy, consumer durables businesses that use trade credit to stimulate demand display a stronger focus on safeguarding their liquidity levels than their industry peers in Asia.

Industry less impacted by late payments than peers in Asia

An average of 35% of the total value of B2B credit sales in Indonesia’s consumer durables industry are overdue (lower than the 43% average for Asia). On average, it takes their customers up to one month longer than the due date to settle overdue invoices. In order to avoid liquidity constraints caused by late payments, more businesses in the Indonesian consumer durables industry (72%)

than their industry peers in Asia (50%) needed to take corrective measures to minimise cash outflows. These most often included the slowdown of invoice payment to their own suppliers. Bad debt write offs in the industry represent 5% of B2B receivables. This is slightly higher than the 4% average for the industry in Asia.

Protection of liquidity levels paramount for the industry in Indonesia

The most common credit management technique practised by consumer durables businesses in Indonesia is the offering of a discount for the early payment of invoices, (cited by 82% of respondents, compared to 63% in Asia), followed by trade debt securitisation and factoring.

A stronger focus on collection of overdue invoices, whether in house or by outsourcing, is shown by more businesses in this industry in Indonesia, than by their peers in Asia. This has contributed to keeping the industry’s average DSO relatively stable over the past year.

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