SINGAPORE — Fewer companies settled their bills on time in the first quarter of this year compared with the last three months of last year, as profitability and cash-flow took a hit amid an economic slowdown at home and abroad.

The latest data by the Singapore Commercial Credit Bureau (SCCB) showed that prompt payments fell to 51.92 per cent, from 57.73 per cent in the fourth quarter of last year, marking the first on-quarter decline since the middle of last year.

Meanwhile, late payments increased to 37.88 per cent in the first quarter from 32.84 per cent in the fourth quarter of last year, the data showed.

“The slight decline in payment performance was likely due to the vagaries of the trade cycle, as local firms are still very much exposed to external headwinds and downside risks,” said Ms Audrey Chia, chief executive of research firm Dun & Bradstreet Singapore, which compiled the data.

Singapore’s economic growth slowed to 2.3 per cent in the January to March period, from 6.9 per cent in the final three months of last year, based on a quarter-on-quarter seasonally adjusted annualised basis, the Ministry of Trade and Industry said last month.

At the same time, key overseas markets such as the United States and Europe were gradually recovering, although the pace has been wobbly, with the US reporting a 1 per cent on-quarter gross domestic product contraction in the first quarter.

However, Ms Chia noted that despite the data, payment delays did not pose a major risk. “Over the past four years, prompt payments have been on a general uptrend, possibly a reflection of greater corporate emphasis on practices to improve credit control and cash-flow management,” she said.

Singapore Business Federation chief operating officer Victor Tay agreed that the poorer performance was probably only due to a cyclical dip, but cautioned that there were worrying signs nonetheless. “Looking at the SCCB data since 2010, there have been times when slow payments jumped on-quarter to more than 50 per cent, so the current 40 per cent range is still manageable,” he said. “But it’s somewhat alarming that the construction sector is reaching 50 per cent.”

By sectors, construction had the highest proportion of late payments, at 47.66 per cent, followed closely by retail, at 46.42 per cent.

“This raises the past spectre, when some construction companies closed. Especially now when they are facing tremendous pressure, due to a shortage of labour, higher foreign-worker levies and costly investments in productivity upgrades,” Mr Tay said. “In the retail sector, businesses continue to face cost issues, especially in terms of rental, which is now taking up to 32 per cent of overall costs, according to the Department of Statistics.

“There are no magic solutions that can solve payment problems, but companies need to better understand cash-flow management and refrain from overly aggressive expansion,” he added.