SINGAPORE - More credit checks and tighter lending controls have led to more companies paying on time, DP SME Commercial Credit Bureau said on Tuesday, according to new findings.
Using a tool called the Days Turned Cash National Average (DTC), the bureau found that Singapore small and medium enterprises (SMEs) took an average of just 36 days to pay their debts during the third quarter.
The DTC measures the number of days a company takes to pay its creditor.
The bureau noted that this is one of the fattest payment cycles in the last five years, and the findings are based on the payment behaviour of more than 120,000 corporations and SMEs in Singapore every quarter.
Ms Ong Siew Kim, senior general manager of DP Information Group (DP Info), said that the improvement in payment behaviour is due to tighter credit terms and the vigorous pursuit of debts.
"SMEs are now imposing strict controls on credit and undertaking a greater number of credit checks through the DP SME Credit Bureau in order to reduce the risk of a default on a debt.
"The faster cycle of payment among SMEs is a good sign as it improves the cashflow position of companies. If SMEs have more money in the bank, they have more resources to fund growth and working capital needs."