Construction firms clear debt at faster pace on higher number of public projects

Construction firms have been having an easier time in their cash flow management as the sector continues to benefit from a boom in the number of projects.

Firms in the sector took just 32 days to settle a debt in the fourth quarter last year, 12 days shorter than the previous quarter, according to the DP SME Commercial Credit Bureau.

The debt repayment period over the fourth quarter is the shortest in four years for construction firms.

An average of 55 days were needed for construction firms to settle their debt in the fourth quarter of 2009.

DP Information Group senior general manager Ong Siew Kim said: "The construction industry has been buoyed by numerous government projects, which has pumped cash into the bank accounts of many firms, leading to increasingly fast debt repayments."

Construction players are also the second quickest in paying their debts, behind only chemical companies.

Chemical firms, which required just 16 days to pay up their debt in the fourth quarter last year, historically have payment cycles that are two times faster than players in other industries.

Utilities and fuel companies, meanwhile, are the laggards, taking the longest time of 92 days in the fourth quarter last year.

Healthcare and medical companies took 41 days, 14 days longer than the previous quarter, the biggest jump in the number of days needed among firms in 14 sectors surveyed.

Manufacturing firms saw the second worst deterioration, taking an additional nine days to 40 days.

Data from more than 120,000 firms' were analysed for the findings.