B2B payment practices-trends, Vietnam 2024

Our survey of companies in Vietnam reveals key insights into current B2B corporate payment trends. Explore emerging dynamics that could shape the future of business transactions.

27 Sep 2024

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Vietnamese companies struggle with mixed B2B payment behaviours

Concern about late payments from B2B customers is evident in our survey of companies in Vietnam, particularly those across all industries who report a deterioration during the past year. This is causing cashflow challenges and financial strain. A negative impact is also being felt by many businesses in the agri-food sector even though the majority of them report no significant change in B2B customer payment behaviour. This is probably because the sector’s slower baseline speed for invoice settlements results in a higher rate of late payments. 40% of companies, mostly in the chemicals and packaging sectors, report an improvement in payment practices of B2B customers.

The mood of anxiety about payment practices is highlighted by a slight increase in the level of late payments. Businesses in Vietnam report that these now affect an average 36% of all B2B invoices, with the agri-food sector hardest hit. Bad debts written off as uncollectable now stand at an average 3% of all B2B invoices, with the agri-food industry again the most affected. Customer cashflow problems and administrative inefficiencies are cited as the main reasons for late payments, especially in the chemicals and plastic/rubber industries. It now takes an average one month beyond due date for Vietnam companies to convert invoices into cash, with a consequent impact on financial stability and operational efficiency.

Future profitability and insolvency risk worry Vietnam’s businesses

A strong mood of optimism about the prospects for B2B customer payment behaviour is evident in our survey of companies in Vietnam. 72% of businesses say they anticipate an improvement in payment practices, with the rest equally split between those foresee no significant change and companies who expect a deterioration in payment timings during the coming year. It is no surprise that this positivity also means 67% of Vietnam businesses, especially in the plastic/rubber sector, believe there will be an improvement in Days Sales Outstanding (DSO) in the months ahead. 25% of companies, mostly in the packaging industry expect no significant change in DSO, and only a minority fear any deterioration.

Summary

A diverse picture of B2B customer payment behaviour is reported by companies in Vietnam. 40% say there is an improvement, especially in the chemicals and packaging sectors. The agri-food industry mostly notes no significant change, while others are seeing a deterioration in payment practices.
Late payments currently affect 36% of all B2B invoices issued by companies in Vietnam, a slight increase compared to the previous year, with the agri-food sector most affected. Bad debts stand at an average 3% of all B2B invoices.
A staggering 72% of companies in Vietnam anticipate improved invoice payment timings from their B2B customers on credit during the next 12 months. The rest are split between those who foresee no significant change and those who expect a deterioration in payment behaviour.