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Fewer companies paid bills promptly in Q1

SINGAPORE — Fewer companies in Singapore paid their bills on time in the first quarter of this year compared with the final three months of last year, data from the Singapore Commercial Credit Bureau (SCCB) showed yesterday, as the weakness in the manufacturing sector and wholesale trade hurt their ability to meet payments.

SINGAPORE — Fewer companies in Singapore paid their bills on time in the first quarter of this year compared with the final three months of last year, data from the Singapore Commercial Credit Bureau (SCCB) showed yesterday, as the weakness in the manufacturing sector and wholesale trade hurt their ability to meet payments.

Overall prompt payments — where 90 per cent of bills are paid within agreed credit terms — plummeted 11.02 percentage points to 39.04 per cent from 50.07 per cent in the fourth quarter of last year. The latest reading marked the lowest percentage of prompt payments in nearly three years, since the second quarter of 2012.

Meanwhile, slow payments — where more than 50 per cent of bills are paid later than the agreed credit terms — rose by 12.52 percentage points to 51.41 per cent, from 38.89 per cent previously. This was also the worst in nearly three years.

The dismal data reversed an uptick in the fourth quarter and quashed hopes of a continued improvement in payment performance, said Dun & Bradstreet (D&B) Singapore, which monitors and compiles the figures through the SCCB.

“With prompt and partial payments on the decline last quarter, the overall weak payment performance marks a difficult time for cash-strapped local firms in fulfilling their debt obligations with their creditors,” said D&B Singapore’s chief executive, Ms Audrey Chia.

“The latest payment performance for the first quarter is certainly one of the worst ... we have seen since the second quarter of 2012, when slow payments were at a historical high of 53.8 per cent. Last quarter, the manufacturers have also overtaken the construction sector as the slowest paymaster, with payment delays accounting for more than half of the payment transactions for the first time in nearly three years,” she added.

Mr Ho Meng Kit, chief executive of the Singapore Business Federation (SBF), told TODAY: “We are seeing some signs of demand constraints in both the Singapore and global economy. Recent findings from the SBF-DP SME Index showed that turnover expectations have fallen across all sectors. Profit expectations have also moderated in tandem. Hence, it may not be a surprise to some that prompt-payment rates have declined. Near-term weakness is likely to continue and the road ahead remains challenging for businesses.

“Nonetheless, we hope the export-oriented industries can provide a boost in the near future. Also, businesses should come through stronger as there are measures introduced in the recent Budget announcement to boost skills training, innovation, internationalisation and collaboration,” he added.

All five industries tracked by the SCCB — construction, manufacturing, retail, services and wholesale — suffered a higher proportion of slow payments from the previous quarter.

The manufacturing sector overtook the construction sector to record the highest proportion of slow payments, which rose by 11.69 percentage points to 53.06 per cent in the first quarter. This was against the backdrop of a 3.6 per cent year-on-year decline in local manufacturing output in February, as reported by the Economic Development Board.

The wholesale sector, which was hit by weak payment performance in the trade of both durable and non-durable goods, posted the steepest increase in the proportion of slow payments, which rose by 17 percentage points to 48.56 per cent.

“As sales revenue will likely be severely impacted in times of low market confidence, it would be prudent for local firms to exercise greater credit vigilance in extending the appropriate credit terms to their business partners. This may involve applying various stress tests and promoting a strong culture of sound and consistent risk management strategies to ensure the long-term survivability of their business,” added Ms Chia.

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