Vietnam's B2B payment terms lengthen amid corporate liquidity strain
Vietnamese companies are extending their business-to-business payment terms due to ongoing liquidity pressures and expectations of a weaker insolvency outlook, according to a new Atradius report.
Ho Chi Minh City – Vietnamese firms are lengthening their business-to-business (B2B) payment terms, driven by ongoing liquidity strains and a projected weakening insolvency outlook, according to a new report from Atradius Kreditversicherung. Despite the country's robust economic expansion, corporate margins are under pressure, and external demand is softening.
The report reveals that approximately 45% of B2B sales in Vietnam are conducted on credit, a figure higher than the regional benchmark. Large industrial and construction firms, in particular, leverage trade credit as a competitive tool. Companies report a greater tendency to extend payment terms than to shorten them, indicating continued expansion of credit-based trade in a more uncertain environment.
Vietnam stands out in the region for its lenient payment timelines. Payment terms of up to three months are more common than in other parts of Asia. While this supports business relationships, it increases exposure to payment delays and strains working capital. Despite many firms reporting faster customer payments, overdue receivables still occur more frequently than the regional average, particularly among SMEs in the manufacturing sector.
Customer cash flow constraints are a significant driver of payment delays. Additionally, regulatory, compliance, and cross-border frictions are cited more often as causes. This combination of extended payment terms and liquidity pressures heightens the risk of credit losses. Atradius advises companies to prepare for increased financing needs and warns of reduced investment in growth or innovation.