B2B payment practices barometer, India 2024

Indian businesses focus on financial health as B2B late payments worsen

Inside a complex picture of current B2B payment trends there is concerning negative shift found in in our survey of companies across India. 50% of businesses, particularly in the chemicals and textile/clothing sectors, say that the payment practices of their B2B customers has deteriorated during the past year. This is leading to cashflow disruptions and financial distress. The rest are almost evenly divided between companies who report on significant change in B2B customer payment behaviour and those who see an improvement. Although this consistency provides some cashflow stability it does not necessarily address the broader issue of late payments where problems can lurk beneath the surface.

This anxiety is reflected in our survey finding that just over half of sales invoiced by Indian companies to B2B credit customers currently remain outstanding at the due date. Additionally, an average 5% of all B2B invoices are ending up as bad debts written off as uncollectable. The agri-food sector in India is particularly hard hit by bad debts due to its vulnerability to unpredictable market conditions and fluctuating commodity prices. It now takes an average 34 days beyond due for companies to turn invoices into cash, causing significant financial problems. Customer cashflow issues and administrative inefficiencies are the main reasons cited for late payments.

Mounting worry about insolvency risk among Indian companies

Our survey finds a very different mood concerning the outlook for insolvency risk. There is widespread anxiety that insolvencies among B2B credit customers may increase during the year ahead. This is anticipated by 71% of Indian companies, primarily in the chemicals industry, due to an uncertain economic landscape, cashflow problems, regulatory changes and supply chain disruptions. The remainder of the businesses surveyed were reticent about making predictions, adding to the cautious mood. Despite this, 89% of Indian companies say they anticipate a surge in demand for their output during the coming months, notably in the chemicals sector, and 76% express confidence about achieving higher profitability. There is pessimism about profits, however, in the agri-food industry.