Mounting Unpaid Bills

FT: Unpaid bills add to China debt problems as receivables mount

Listed companies had to wait a median 70 days to receive payment last year, the longest delay in 14 years, as cash flows tightened amid slack final demand. That compares with a median 60 days in 2014 and 46 days in 2011, according to Wind Information, a Chinese financial database.

Ms Yu says that an increasing share of customers now insist on paying with a bankers’ acceptance rather than cash. Similar to a postdated cheque, bankers acceptances are a kind of IOU from a company and its bank. Ms Xu says that a few years ago, 5 to 10 per cent of her sales were paid this way, but that has now risen to 20 to 30 per cent. Most cannot be cashed for 90 or 180 days.

Nor does the problem end with Ms Yu. “We have no choice but to pass the delays upstream [to our suppliers],” she says.

That 70 days is higher than any year this century except for 2000, when it reached 110 days.