Survey findings for Indonesia

B2B credit sales significantly increased during the pandemic

Significantly more businesses polled in Indonesia (60%) than in Asia (44%) reported increased trading on credit terms with B2B customers in the months following the outbreak of the pandemic. 51% of the total value of sales across the industries surveyed (agri-food, chemicals and consumer durables) is now transacted on credit. This is higher than last year’s 49% average, although below the current 54% for Asia. Indonesia’s consumer

durables industry is the most active, with an average of 55% of sales made on credit (regional average: 58%). The chemicals industry ranks second (54%, on par with Asia) and the agri-food industry follows with an average of 47% of credit-based B2B sales (lower than the 52% average for the industry in Asia). The proportion of credit-based sales is almost equally split between the domestic (52%) and export markets (48%).

Indonesia: how do you expect your business performance to change over the coming months?

Which key developments will drive your business improvement?

Businesses use credit to strengthen trade relationships during pandemic

The majority of businesses polled in Indonesia (71%, higher than the 54% average for Asia) told us they accepted trade credit requests to encourage repeat business with established customers.

A significant number of businesses also said they offered credit terms to win new customers. Less commonly cited reasons for offering trade credit

include: staying competitive in their markets, and allowing customers time to pay (for example, if they are awaiting payment from their buyers, need to sell goods on, or to obtain bank finance). These latter reasons for offering credit were reported less frequently by businesses in Indonesia than their Asian peers.


of survey respondents in Indonesia told us that their B2B customers slowed down invoice payment over the past year. On average, it took them up to one month compared to nearly three weeks last year to settle overdue invoices (regional average of respondents: 40%).

Atradius Payment Practices Barometer – June 2021

Costs of credit management and trade debt collection increase

Survey data indicates that, in the year that followed the pandemic outbreak, more businesses in Indonesia (56%) than in Asia (49%) reported increased administrative costs associated with the management of accounts receivable.

This was most often seen with businesses that opted for retaining and managing customer credit risk internally through self-insurance. costs involved mainly acquiring credit information (most often through the customer’s financial statements and bank references) as well as assessing and monitoring customer credit risk. Increased costs for the collection of trade debts were reported by far more businesses in Indonesia (52%) than in Asia (42%) and most often by

businesses that chose to manage the collection of long-term overdue invoices internally rather than by outsourcing. Additional costs associated with the in-house management of trade debt collection also included increased financing or interest paid during the time-lag between the credit sale and the settlement of the invoices, as well as increased bad debts. With just over half of Indonesian sales traded on credit, it is not surprising that costs associated with the provision of trade credit need to be thoroughly managed. If this is not done, costs may easily outweigh sales revenue, thus jeopardising the profitability of the business especially if profit margins are tight.

Indonesia: top 5 greatest challenges to business profitability in 2021

Indonesia: on average, within what time frame do your B2B customers pay their invoices?

Payment terms most often reflect company standards

Far more businesses in Indonesia (46%) than in Asia (35%) offered customers longer time to settle invoices over the past year, most often up to one month longer to pay. The payment terms for each industry surveyed in Indonesia are outlined in the overview by industry section below.

Payment terms reflect company standards for significantly more respondents in Indonesia (79%) than in Asia (53%). In addition, 65% of

respondents in Indonesia (regional average: 43%) told us their payment terms were influenced by the availability and cost of capital needed to finance credit sales. Profit margins dictate payment terms granted to the customers of 57% of respondents in Indonesia compared to 36% in Asia. The credit capacity of their customers and the payment terms received from suppliers seem to be more relevant for businesses in Indonesia than for their peers in Asia.

Payment practices worse than regional average

Significantly more respondents in Indonesia (52%) than in Asia (40%) told us that their customers slowed down invoice payment over the past year. On average, it took them up to one month longer than last year to settle overdue invoices. This affects a 49% average of all B2B invoices, which is consistent with the average for Asia overall (50%). 5% of long-term overdue invoices (more than 90 days overdue) were written off as uncollectable by

businesses in Indonesia. This is consistent with the average for Asia. The fact that businesses in Indonesia were almost equally impacted by customer credit risk as their peers in Asia may be a reflection of a similar approach to the management of overdue invoices, taken by businesses across the region. Further detail can be found below in the overview by industry section.

Businesses point to the ongoing pandemic as the primary threat to business profitability

Twice as many Indonesian businesses (35%) as their peers in Asia (17%) expressed concern about a continuation of the pandemic negatively impacting their profitability over the next months. This expressed pessimism is highly likely to stem from a recent spike of coronavirus cases, which led to the reinstatement of several restrictions, which in turn had a negative impact on the recovery in early 2021. A quarter of the survey’s respondents (in Indonesia and Asia) also told us they are very much concerned over

maintaining adequate cash flow over the next months. Many businesses are also worried about a likely fall in demand for their products and service over the next months. This concern was expressed by 18% of respondents in Indonesia compared to 15% in Asia. Interestingly, this largely negative business sentiment is at odds with economic expectations that predict a significant rebound of some of the main growth drivers of Indonesia’s economy, namely private consumption and exports.

Indonesian businesses anticipate growth stemming from domestic economic rebound

Looking ahead, Indonesia’s businesses appear to be far more optimistic (69%) than their peers in Asia (52%) in anticipating improvement in their business performance over the next 12 months. 59% of businesses (regional average: 48%) believe the improvement in performance will be mainly due to a rebound of the domestic economy. 36% (both Indonesia and Asia alike) predict improvement will stem from a combination of healthier export flows and a rebound in the domestic economy. It is worth noting that fewer respondents in Indonesia (5%) than Asia (15%) believe business improvement will come exclusively

from exports. This is may be a reflection of the fact that the Indonesian economy is rather closed. Exports account for just about 20% of GDP, which makes Indonesia less susceptible to global trade downturns than some other Southeast Asian countries. Most of the businesses we polled (46%, regional average: 32%) told us that selling on credit to B2B customers would become an increasingly widespread business practice over the next 12 months. In particular, this would be aimed at stimulating demand in industries where demand plunged due to the pandemic economic downturn.

Self–insurance on the rise over the coming months

In light of intention expressed by many businesses to use credit sales to stimulate demand, it come as no surprise that Indonesia’s businesses place a great emphasis on credit risk mitigating tools. nearly half of the businesses we polled (49%, regional average: 43%) told us they plan to retain and manage customer credit risk internally (selfinsurance) more often over the coming months. A similar percentage said they would increase requests for payment guarantees. 44% reported they anticipate to outsource credit management to a credit insurer over the coming months (regional average:

37%). cash sales, factoring and invoice payment reminders will also be used by businesses in Indonesia more often than on average across Asia. The same goes for the offering of discounts for early payment, and the adjustment of payment terms to match the credit risk profile. This varied approach to credit management is aimed at keeping Days Sales Outstanding (DSO) under control over the coming months. This was expressed by 50% of businesses in Indonesia and contrasts with the 38% of respondents in Asia that believe DSO will deteriorate over the coming months.

73 days

is the average time it takes Indonesian suppliers to collect overdue B2B invoices.

Atradius Payment Practices Barometer – June 2021

We have lots of free content about improving credit management practices in the Trading Briefs section of our website

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