SINGAPORE - Payment performance was at its peak in the third quarter of this year after it rebounded with the highest proportion of prompt payments in nearly two years.
According to a report by the Singapore Commercial Credit Bureau (SCCB), a contraction in the domestic economy and a slowdown in externally-oriented manufacturing and wholesale trade sectors did not affect prompt payments.
This is an improvement from the second quarter's poor showing when over 50 per cent of slow commercial payment transactions were recorded.
Overall payment promptness hit a new record high at 49.3 per cent, an increase of 12 percentage points from the previous quarter.
Ms. Audrey Chia, D&B Chief Executive Officer said it is encouraging to see visible signs of improvement in the payment performance of local companies, especially when market sentiments are dampened.
"Hopefully, the improved payment performance will continue into the final quarter and instill some level of confidence within our local market."
"Circumventing cashflow issues will however remain a challenge for many local companies as they have to grapple with the likelihood of payment defaults with the ongoing global uncertainties," she said.
A year-on-year comparison revealed that payment promptness increased modestly by 3.3 percentage points from 46 per cent last year.
Slow payments have fell by 13.6 percentage points to 40.2 per cent. This marks a 24-month low of the level of payment delinquency in Singapore when only 27.8 per cent overall slow payments were previously registered in the third quarter of 2010.
Year-on-year slow payments fell by 3.4 percentage points from 43.6 per cent the same quarter last year.
The report also said that partial payments are on the rise, with a marginal increase of 1.6 percentage points to 10.5 per cent from the previous quarter.
SCCB's report said payment delinquency has declined across all sectors. The wholesale sector staged a strong rebound with the largest dip in payment delinquency among all the sectors after experiencing its worst payment record last quarter.
Slow payments dropped 19.87 percentage points to 31.03 per cent, which also marks the lowest level registered in 24 months.
Payment performance for the manufacturing sector took a turn for the better as slow payments fell by 14.03 percentage points to 43.77 per cent after a lackluster performance last quarter.
A similar trend was also observed in the services sector as overall slow payments declined by 13.16 percentage points to 39.44 per cent.
Higher levels of activity in the finance and insurance provided substantial support to growth in the service sector for the third quarter.
In the construction sector, payment delays dropped by 5.47 percentage points to 49.43 per cent.
This is mainly attributed to higher certified progress payments made from private sector industrial and residential projects.
Growth in the construction sector has also been significantly stronger with a healthy expansion compared to the previous quarter.
The retail sector continues to be plagued by payment woes. More than 50 per cent of commercial transactions within the sector are made 30 days or more above the agreed terms.
This is despite a drop in recorded slow payments last quarter.
According to the analysis, slow payments fell by a mere 2.69 percentage points to 59.71 per cent quarter-on-quarter.
A year-on-year analysis further revealed that the retail sector is the only sector with an increase in slow payments, up 5.71 percentage points from 54 per cent in the third quarter of 2011.
Slow payments for the remaining four sectors have shown visible improvements over the past year.
The wholesale sector saw the most improvement with a decrease in slow payments by 5.47 percentage points from 36.5 per cent in the same quarter last year.
Payment delays for both construction and services sector declined by 4.27 percentage points and 4.26 percentage points from 53.7 per cent and 46.2 per cent respectively.