SINGAPORE - Going by the ability to make payments on time, the cash flow situation for Singapore firms may be at their worst in eight years.
Prompt payments accounted for 38.39 per cent of total transactions in the third quarter of 2020, down from 40.09 per cent in the previous three months. This is the lowest since the second quarter of 2012 when on-time payments made up 37.3 per cent of transactions, said a report released by the Singapore Commercial Credit Bureau (SCCB) on Tuesday (Oct 6).
On a year-on-year basis, prompt payments dropped more sharply - by 10.42 percentage points - from 48.81 per cent in the same period of 2019. The data was compiled by D&B Singapore from more than 1.6 million payment transactions of firms operating through SCCB.
Slow payments dipped slightly to 44.16 per cent from 45.78 per cent quarter on quarter. But year on year, they rose by 6.87 percentage points from 37.29 per cent in Q3 2019.
Prompt payment refers to when 90 per cent or more of total bills are paid within the agreed payment terms. Slow payment occurs when less than 50 per cent of total bills are settled on time.
Meanwhile, partial payments - when 50 to 70 per cent of total bills are paid on time - increased moderately to 17.45 per cent in the third quarter, from 14.13 per cent in the previous quarter.
Quarter-on-quarter, three out of five industries made more payment delays, with the construction sector seeing the largest increase to 56 per cent of all payments from 51.97 per cent.
Payment delays also rose in manufacturing to 39.55 per cent, from 38.52 per cent in the second quarter.
Conversely, the retail sector saw a marked improvement in payment delays compared with the previous quarter with the phase two reopening of businesses on June 19 after the circuit breaker was lifted. Slow payments fell by 8.92 percentage points to 42.30 per cent in the July to September quarter from 51.22 per cent in the previous three months. This was largely due to retailers of general merchandise, food and beverage as well apparel and accessories.
Ms Audrey Chia, D&B Singapore's chief executive officer, said; "On the overall, the full impact of payment delays was more greatly felt in the third quarter compared to the previous quarter as businesses continue to face cashflow woes. The construction sector in particular has seen a significant deterioration due to a temporary halt and series of delays in project completion.
"However, we have also seen an increase in partial payments being made by businesses over the previous quarter," she noted. "We would expect this trend of staggered payment plans to continue in the coming months."
