Singapore has the highest number of unpaid invoices of Asia Pacific countries with 41.5 per cent unpaid at their due date, a survey by one the world's largest credit insurers show.

Atradius said on Friday that the unpaid debts could prove a problem for an economy where over 40 per cent of export transactions are made on credit terms.

In its latest annual Payment Practices Barometer report for the Asia Pacific, Atradius noted that "collection of outstanding invoices" was the second biggest challenge for Singapore's respondents, though at 26 per cent this was the highest response rate of the countries surveyed, suggesting that it is more of a problem for Singapore than other countries.

"It is possible that this is attributable to Singapore's close trading relationship with China, which has notoriously hostile collections regulations and legislation preventing foreign businesses from pursuing Chinese debts," said the report.

Atradius said that businesses lose 50 per cent of the value of their receivables that are not paid within 90 days of the due date. Unpaid bills is at best frustrating but at worst terminal for businesses.

Overall, late payment seems to be less of a problem for businesses in Asia Pacific with 36.2 per cent of invoices unpaid at their due date, than it is for their counterparts in the Americas where 38.4 per cent extended past due date. It said the primary reason for payment delays from domestic customers is insufficient funds (cited by 47.3 per cent of survey respondents), while foreign invoices are more likely to go unpaid due to complexity of payment procedures.

Singapore companies also said that the main challenge to profitability was "maintaining adequate cash flow" at 31.7 per cent, although this was the second lowest response rate of all the Asia Pacific countries surveyed.

"Falling demand for products and services" was third most frequently cited challenge, noted by 24.5 per cent of respondents in Singapore compared to 32.3 per cent for the Asia Pacific region overall.

Although, "bank lending restrictions", which was the fourth most frequently noted challenge, cited by 17.8 per cent of Singaporean respondents, still represented an above average risk compared to the regional average of 14 per cent.