Singapore

Payment performance of Singaporean companies declined strongly in Q3, 2016: Report

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As the third quarter got over, Singapore Commercial Credit Bureau (SCCB) came up with a news release saying that prompt payments accounted for less than half of all payment transactions while slow payments made up more than two-thirds of all payment transactions for the first time since 3Q15.

D&B Singapore’s chief executive officer Audrey Chia said that the weaker payment performance in Q3 clearly indicates that firms are feeling the impact of a credit crunch. She also added,

The construction sector has, in particular, experienced one of the highest proportions of payment delays in two years since Q3 2014. Managing cash flows has always been a major concern this sector given its complexity, involving multiple suppliers and special trade contractors who undertake specialized works. The main challenge for construction firms would be to exercise control over cash flow planning and to compress their cash flow cycles into the shortest period possible.

Payment performance Q3

D&B Singapore compiles the figures by monitoring more than 1.6 million payment transactions of firms operating through its Singapore Commercial Credit Bureau. According to them, transactions are classified as prompt payments when at least 90 per cent of the total bills are paid within the agreed payment terms. Slow payments are when more than 50 per cent of the total bills are paid later than the agreed credit terms.

On a quarter-on-quarter basis, prompt payments dipped from 45.92 per cent in the second quarter of 2016 to 42.18 per cent. Slow payments went up to 42.18 per cent from 45.92 per cent in the previous quarter.

Slow payments across all sectors

The delay has affected all the sector, quarter-to-quarter slow payments has been seen across construction, manufacturing, retail, services, and wholesale sectors. This is in contrast to 4Q15 when only one out of the five industries saw increased slow payments.

On a year-on-year basis, payment delays have picked up across four of five sectors this quarter. Further, construction is the only sector to show a year-on-year increase in slow payments. This is attributed largely by the weaker payment performance of special trade contractors, which witnessed the sharpest increase of 5.85 percentage points to 48.89 per cent, from 43.04 per cent in the second quarter of 2016.

Meanwhile, slow payments in the services sector declined due to “a downturn within the business services segment and a fall in tourist arrivals in recent months”, said SCCB. Quarter-on-quarter payment delays rose to 48.01 per cent, from 44.14 per cent the previous quarter.



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