Channel NewsAsia

Decline in prompt payments by local firms in Q2

Only 47.38 per cent of payments were made on time between April and June, down from 51.92 per cent in the previous quarter, according to D&B Singapore.

SINGAPORE: Amid lacklustre economic growth, fewer companies in Singapore settled their payments on time in the second quarter, according to a study released on Tuesday (Aug 19).

The study by D&B Singapore, which monitors more than 1.5 million transactions by companies through the Singapore Commercial Credit Bureau (SCCB), found that only 47.38 per cent of payments were made on time between April and June, down from 51.92 per cent in the previous quarter.

However, compared with a year ago, payment promptness improved slightly, from 46.77 per cent to 47.38 per cent.

The proportion of slow payments rose from 37.88 per cent in the first three months of the year to 41.1 per cent in the second quarter. Partial payments also rose from 10.2 per cent to 11.52 per cent, the study found.

All five industries monitored in the study – construction, manufacturing, retail, services and wholesale – experienced an increase in payment delays during the quarter.

The construction sector saw the highest number of slow payments, with payment delays rising from 47.66 per cent in the previous quarter to 51.44 per cent in the second quarter. According to the study, citing SCCB data, payment delays within the construction sector last crossed the 50 per cent mark in the second quarter of 2012.

The services sector experienced the sharpest increase in payment delays, rising from 40.06 per cent to 43.85 per cent in the second quarter. Health services, hotels and accommodation services and business services accounted for the largest increases in payment delays, registering 51.08 per cent, 46.67 per cent and 44.10 per cent, respectively.

Ms Audrey Chia, D&B Singapore CEO, said: “The downward trend in payment performance clearly reflects how slower economic growth last quarter has impacted the ability of firms in meeting their debt obligations.”

However, she noted that the rising proportion of partial payments suggest that firms are placing a greater emphasis on remaining creditworthy to their creditors.

“As global uncertainties continue to prevail, firms will have to exercise greater flexibility in adapting their cashflows and credit management policies according to volatilities of the macroeconomic environment. Partial payments may the most viable option for cash-strapped firms,” Ms Chia added.