Singapore companies more prompt in paying their bills in Q2: SCCB

Office workers at Raffles Place.
Office workers at Raffles Place. PHOTO: LIM YAOHUI

SINGAPORE - Companies here been markedly quicker to settle their bills in the second quarter of this year, in a reversal from the first three months of the year, a report released Wednesday by the Singapore Commercial Credit Bureau (SCCB) shows.

In April to May, prompt payments rose by 9.43 percentage points to 48.47 per cent from 39.04 per cent in the first quarter of the year, according to the SCCB's quarterly payment performance report.

SCCB said the latest figure marks the second highest reading within a year when prompt payments were at a one-year high of 50.07 per cent in Q4 2014.

Partial payments increased marginally by 0.63 percentage points to 10.18 per cent in Q2 from the previous three months, while slow payments fell by 10.06 percentage points to 41.35 per cent.

A payment of at least 90 per cent of total bills within the agreed payment terms is considered prompt. A slow payment occurs when more than 50 per cent of total bills are paid later than the agreed credit terms.

The figures were compiled by D&B Singapore, which monitors more than 1.6 million payment transactions of firms operating through the SCCB.

The improvement in payment performance occurred in all five sectors that the SCCB monitors: construction, manufacturing, retail, services and wholesale sectors.

Ms Audrey Chia, D&B Singapore's chief executive officer, said the improvement in payment speed was indicative of improved cashflows of firms and their ability to meet their debt obligations.

However the improvement in payment speed differed across sectors, she said. Half of the payment transactions in manufacturing and retailing were still delayed in Q2.

"We found (that) manufacturers and retailers (are) experiencing only a marginal decrease in payment delays. Incidentally, these were also the only two sectors which had more than half of their payment transactions delayed in Q2," she said.

For the second consecutive quarter, the manufacturing sector recorded the highest proportion of slow payments which has remained almost unchanged in Q2 2015, around 53 per cent. But on a year-on-year (y-o-y) basis, payment delays in the sector have surged by 10.49 percentage points to 53.05 per cent in Q2 2015 from 42.56 per cent in Q2 2014.

SCCB noted that as consumer spending and retail expenditure continued to ease, retailers of food and beverage and general merchandise goods recorded the largest increase in slow payments.

Looking ahead, Ms Chia warned that it was unclear if the general uptrend would continue into the rest of the year.

"Moreover, the improvements in payment performance were due to cyclical upswings in certain sectors," she said. "It would be prudent for firms to take into account any seasonal fluctuations in managing risks and planning for their cashflows."