Cash flow woes for construction firms worsen in Q3 as slow payments rise across all sectors

Local construction firms saw the highest proportion of payment delays since the first quarter of 2016.
Local construction firms saw the highest proportion of payment delays since the first quarter of 2016.ST PHOTO: FILE

SINGAPORE - Slow payments rose for local companies across all sectors in the third quarter of this year, with the cash flow woes of already worst-hit construction firms worsening.

According to the latest quarterly survey by the Singapore Commercial Credit Bureau (SCCB), slow payments rose to slightly more than two-fifths of total payment transactions while prompt payments fell to less than half.

On a quarter-on-quarter basis, slow payments increased marginally by 2.28 percentage points from 38.47 per cent in the second quarter of this year to 40.75 per cent in Q3.

Year on year, slow payments improved moderately, falling by 5.62 percentage points from 46.37 per cent in Q3 2016 to 40.75 per cent in Q3 2017.

Prompt payments dropped by 2.88 percentage points from 50.31 per cent in Q2 2017 to 47.43 per cent in Q3 2017 on a quarter-on-quarter basis. Year on year, they climbed by 5.25 percentage points from 42.18 per cent in Q3 2016 to 47.43 per cent in Q3 2017.

Quarter on quarter, slow payments deteriorated across all five industries - construction, manufacturing, services, retail and wholesale trade. This stands in contrast to Q2 2017 when all five industries experienced improvements in slow payments. However, when compared to a year ago, slow payments have improved across four of five industries, with construction the only sector registering a year-on-year increase in slow payments in Q3 2017.

For the seventh straight quarter, payment performance deteriorated for the construction sector which recorded the highest proportion of payment delays - slow and partial payments - since Q1 2016. SCCB noted that the latest reading of slow payments within the construction sector is also the second-highest since Q3 2012, accounting for more than half of total payment transactions.

Quarter on quarter, slow payments for construction firms jumped significantly by 8.14 percentage points from 45.16 per cent in Q2 2017 to 53.30 per cent in Q3 2017.

The heavy construction sub-sector accounted for the steepest increase in slow payments, up by 11.25 percentage points from 45.96 per cent in Q2 2017 to 57.21 per cent in Q3 2017.

On a year-on-year basis, slow payments climbed moderately by 2.48 percentage points from 50.82 per cent in Q3 2016 to 53.30 per cent in Q3 2017.