Jump in Singapore companies delaying payment in Q1

SINGAPORE - Cash-strapped local firms put in their worst showing in nearly three years in the first quarter of the year in terms of paying their bills on time.

Fewer than two in five payments were prompt and more than half were delayed, according to the latest payment report from the Singapore Commercial Credit Bureau (SCCB).

The SCCB is part of consultancy Dun & Bradstreet (D&B) Singapore. It said the first quarter effort was "an unprecedented turn for the worse" after a rebound in the fourth quarter of last year.

Prompt payments tumbled 11 percentage points from 50 per cent in the fourth quarter to 39 per cent in the previous quarter. It is the worst prompt payments figure since the second quarter of 2012, when prompt payments came in at 37.3 per cent.

For the purposes of the data, prompt payment is when at least 90 per cent of a firm's bills are paid according to agreed terms. Slow or delayed payment is when more than 50 per cent of total bills are paid late.

In year on year terms, prompt payments slumped 12.9 percentage points in the first quarter.

The latest woeful showing by local firms is in marked contrast to the fourth quarter of last year which had been an improvement on the third quarter. Prompt payments formed nearly half of the payment transactions, and slow payments fewer than 40 per cent.

SCCB said the first quarter dive in payments on time ended hopes of a sustained pick-up in prompt payments.

All five economic sectors- construction, manufacturing, retail, services and wholesale - recorded a larger proportion of slow payments on a quarter-on-quarter basis.

The manufacturing sector has overtaken the construction sector in registering the highest proportion of slow payments, at 53.06 per cent in the first quarter.

(D&B) Singapore's chief executive Audrey Chia said that declining prompt and partial payments will spell difficulties for cash-strapped local firms with debt obligations.

She said: "As sales revenue will likely be severely impacted in times of low market confidence, it would be prudent for local firms to exercise greater credit vigilance in extending the appropriate credit terms to their business partners."

"This may involve applying various stress tests and promoting a strong culture of sound and consistent risk management strategies to ensure the long-term survivability of their business."