China is facing a staggering amount of unpaid bills as Chinese firms are having a hard time collecting payments from customers. 

It takes 83 days for companies to collect cash from completed sales. This is two times longer compared to emerging-market peers. 

Bloomberg reported that delayed payments are spreading across various businesses including industrial and technology firms. Because of this, accounts receivable grew to up to 23 percent over the past two years, reaching nearly $590 billion.

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The mountain of unpaid bills revealed how cash shortage threatens bank, bondholders and the country's interconnected supply chains network. Bloomberg revealed that Chinese firms have two options: continuously give their clients extensions, or chop down taps and watch as sales continue to decline.

This is quite a difficult decision to make given that corporate bankruptcies this year are expected to increase by up to 20 percent.

"There is a knock-on effect through the economgy," said Fraser Howie, co-author of Red Capitalism: The Fragile Financial Foundation of China's Extraordinary Rise. "Part of the end game is default and closure."

China's economic slowdown also contributes to the difficulty in collecting payments. Credit insurance company Euler Hermes revealed that corporate debt levels have resulted to a number of companies grappling to meet liabilities, with corporate insolvencies rising up to 25 percent in 2015.

"It's a big problem when you have rising insolvencies, a bad economic environment and less liquidity for small companies," said Mahamoud Islam, Hong Kong's first senior Asia economist.

Tagseconomic slowdown, china, unpaid bills, corporate insolvency, China debts