Singapore companies clock further progress in paying their bills in Q4

Singapore companies clock further progress in paying their bills in Q4

Singapore - Local firms improved their payment performance in the last three months of 2015 for the third straight quarter, with overall prompt payments coming close to a two-year high and improvements seen in the number of slow payments.

The Singapore Commercial Credit Bureau (SCCB) said 53.1 per cent of all payment transactions in Q4 2015 were made promptly, an improvement over the 51.05 per cent recorded in Q3 2015. This also compares favourably with the 50.07 per cent achieved in the last quarter of 2014.

D&B Singapore compiles the data by monitoring more than 1.6 million payment transactions of Singapore firms operating through SCCB.

Payments are classified as "prompt" when at least 90 per cent of total bills are paid within the agreed payment terms.

Companies also made improvements in their slow payments. Such payments - where more than half the total bills are paid later than stated in the agreed credit terms - dipped to 35.43 per cent in Q4 2015, 2.88 percentage points lower than in Q3 2015. A year ago, the fall was sharper at 3.46 percentage points.

All sectors except construction recorded a quarter-on-quarter fall in slow payments. Payment delays by this sector rose 0.39 percentage points to 40.37 per cent in Q4, due to muted public building activities across the residential, non-residential and civil engineering segments.

The retail sector, which benefited from an uptick in tourist arrivals, trimmed its slow payments by 1.90 percentage point from the third quarter to 40.64 per cent.

In the manufacturing sector, slow payments dipped 3.32 percentage points quarter on quarter to 37.73 per cent, thanks to a decline in slow payments by manufacturers of tobacco and chemicals and chemical products; other manufacturing sub-sectors had marginal or no changes in payment trends from Q3 2015, said the SCCB.

The services sector reduced the number of slow payments on the back of resilient demand for corporate-facing services and information and communication sub-sectors. Its payment delays fell by 3.74 percentage points quarter on quarter to 36.84 per cent.

The wholesale trade sector was the best paymaster across all sectors, with payment delays dropping 3.30 percentage points to 29.61 per cent in Q4, due to growth in cargo volumes and oil exports.

Commenting on the latest statistics, D&B Singapore CEO Audrey Chia said improvements in overall payment performance could be a cyclical uptick, especially as the retail and services sectors rake in better sales and profit margins during the festive season.

She noted, however, that the improvement in payment performance slowed down for the final quarter of 2015, and the fall in slow payments was relatively marginal compared to the improvements made in Q3.

"Given the multitude of challenges such as manpower constraints, higher office leasing costs and a muted external environment, local firms will have to contend with margin pressures and manage their cashflows accordingly," she cautioned.

This article was first published on January 5, 2016.
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