Slow bill payments by Singapore firms hit 5-year high in 2016: Credit bureau

An office worker at Raffles Place.
An office worker at Raffles Place. PHOTO: ST FILE

SINGAPORE - With the Singapore economy in the doldrums for most of last year, the payment performance of local firms in 2016 was the worst since 2011.

Slow payments have increased since 2014 and hit a new five-year high in 2016 at 44.71 per cent while prompt payments fell to a five-year low at 43.77 per cent, the Singapore Commercial Credit Bureau said on Tuesday (Jan 3).

For four consecutive quarters last year, prompt payments accounted for less than half of total payment transactions while slow payments made up more than two-fifths of all transactions, credit bureau data showed.

Prompt payment refers to cases where at least 90 per cent of total bills are paid within the agreed payment terms. Slow payment refers to cases where more than 50 per cent of total bills are paid later than the agreed credit terms.

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

"The latest payment figures for the final quarter of 2016 were to some degree unprecedented based on the trend which we have observed over the recent years," said Ms Audrey Chia, D&B Singapore's chief executive officer.

"Typically in Q4, the payment performance of firms would have improved visibly due largely from sales which have been raked in during the festive season. Based on our statistics, slow payments have accounted for less than two-fifths of all payment transactions in the final quarter of 2013, 2014 and 2015. Q4 2016 marks the first time in 3 years when the proportion of payment delays has exceeded two-fifths.

"However, not all is doom and gloom as there have been some slight improvements on a quarter on quarter basis," she added. This could be due to firms taking a more proactive stance in enforcing of payment terms and exercising greater control over cashflow planning."

Quarter on quarter, slow payments have improved slightly across all five industries in the October to December period of 2016. This stands in contrast to the previous quarter when slow payments deteriorated across the construction, retail, wholesale trade, manufacturing and services industries.

However, year on year payment delays continued to rise significantly for all five industries, said the credit bureau.

The construction sector, hit by the property market slowdown, registered the highest proportion of slow payments for the fourth consecutive quarter, due largely to bad debts by firms within the heavy construction sub-sector.