Prompt payment by firms was near a two-year high in the fourth quarter last year, according to the Singapore Commercial Credit Bureau (SCCB) yesterday.
It found that 53.1 per cent of companies settled their bills on time - up 2.05 percentage points from the third quarter and 3.03 percentage points ahead of the fourth quarter of 2014.
This is the third straight quarter of improvement and the second-highest reading since the fourth quarter of 2013, when 57.73 per cent of firms made prompt payments.
But improvements in payment performance across all sectors of the economy slowed in the fourth quarter, compared with the third, said the SCCB.
Payment are deemed prompt when at least 90 per cent of a total bill is paid within the agreed credit terms, while a slow payment occurs when more than 50 per cent of the bill is settled later than those terms.
There were fewer slow payments by local firms - 35.43 per cent in the fourth quarter, compared with 38.31 per cent in the third and down from 38.89 per cent in the fourth quarter of 2014.
The manufacturing, retail, services and wholesale industries saw fewer slow payments in the fourth quarter. In contrast, slow payment in the construction sector rose by 0.39 percentage point due to muted public building activity across the residential, non-residential and civil engineering segments.
The improvement in payment performance among manufacturers is largely attributed to the steep decline in slow payments by tobacco, chemicals and chemical product makers, said the SCCB.
Partial payments rose marginally for the third consecutive quarter - up 0.82 percentage point from the third quarter's 10.65 per cent to 11.47 per cent in the fourth quarter.
They were also up a touch on a year-on-year basis, rising 0.44 percentage point from 11.03 per cent in the fourth quarter of 2014.
The improvements in overall payment performance could be a cyclical uptick, especially for both retail and services sectors, which have registered better sales and profit margins during the festive season, compared with the preceding quarters, said Ms Audrey Chia, chief executive of consultancy Dun & Bradstreet Singapore, SCCB's parent.
"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 cash flows accordingly."