S’pore firms’ payment performance improves again but outlook cloudy

SINGAPORE (THE BUSINESS TIMES) – The payment performance of local firms improved for the third consecutive quarter, according to data from the Singapore Commercial Credit Bureau (SCCB) released on Monday (July 4).

SCCB chief executive Audrey Chia noted that this is largely due to improvements in the construction and services sectors. She was, however, bearish on the payments outlook in the coming months, based on expectations of slower growth and downside risks in global supply chains.

“Firms will need to exercise continued credit vigilance and mitigate potential cash flow risks,” Ms Chia said.

Prompt payments in the second quarter of this year inched up slightly by 0.1 percentage point compared with the previous three months. Year on year, on-time payments rose 0.4 percentage point to 41.2 per cent.

Slow payments fell further by 0.1 percentage point quarter on quarter, dipping 0.5 percentage point year on year to 44.1 per cent this quarter.

Partial payments were down 0.1 percentage point from last quarter, but rose 0.1 percentage point year on year to 14.8 per cent.

Prompt payment refers to when 90 per cent or more of total bills are paid within the agreed payment terms, while slow payment happens when less than 50 per cent of total bills are paid within the agreed terms. Partial payment refers to when between 50 per cent and 90 per cent of total bills are paid within the agreed payment terms.

Construction, retail, services and wholesale saw improvements in slow payments, both on a quarterly and yearly basis. The manufacturing sector saw a deterioration in slow payments quarter on quarter, owing to an increase in payment delays by manufacturers of petroleum and coal products, chemicals and tobacco, said SCCB in its report.

Slow payments for the manufacturing sector inched up by 0.2 percentage point quarter on quarter, but fell 0.7 percentage point year on year to 38.2 per cent in the second quarter.

In the construction sector, slow payments improved marginally after deteriorating slightly in the previous quarter. Slow payments dipped by 0.2 percentage point quarter on quarter, while slow payments fell by 0.05 percentage point year on year to 55.8 per cent in the second quarter of this year.

The retail sector saw slow payments fall 0.2 percentage point quarter on quarter and 1.7 percentage points year on year to 43.6 per cent in the second quarter. SCCB attributes these improvements to fewer slow payments by retailers of general merchandise, apparels and accessories, furniture and home furnishing.

Slow payments within the services sector improved further in the second quarter due to a fall in payment delays in personal services, business services and social services. Figures from the report show that slow payments fell 0.2 percentage point quarter on quarter, while slow payments eased 0.6 percentage point year on year to 43.2 per cent.

Payment delays within the wholesale trade declined slightly on a quarterly basis due to a dip in slow payments by wholesalers of both durable and non-durable goods, said SCCB. Payment delays fell 0.1 percentage point quarter on quarter, but jumped 0.7 percentage point year on year to 39.7 per cent.