SINGAPORE - The payment performance of local firms has deteriorated strongly in the third quarter, according to figures released on Monday (Oct 3) by the Singapore Commercial Credit Bureau (SCCB).

Prompt payments tumbled to slightly over two-fifths (42.2 per cent) of payment transactions in Q3 compared to slightly more than half (51.1 per cent) in the same period last year.

Slow payments also rose markedly, accounting for 46.4 per cent of payment transactions in the July-September quarter from 38.3 per cent in Q3 2015.

Payment performance deteriorated across all five industries. This stands in contrast to Q2 when improvements in slow payments were visible across all industries. Year on year payment delays have also jumped markedly for all five industries, said SCCB.

The construction sector was the worst hit in Q3 with slow payments hitting an all-time high of 50.8 per cent for the sector. This was largely due to a weaker payment performance by special trade contractors, said SCCB.

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

Prompt payment is classified as such when at least 90 per cent of total bills are paid within the agreed payment terms while slow payment comes when more than 50 per cent of total bills are paid later than the agreed credit terms.

"The weaker payment performance in Q3 is a clear indication that firms here are feeling the impact of a credit crunch," said D&B Singapore's chief executive officer Audrey Chia.

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