SME payments in Q1 slow to near three-year low

SMALL and medium-sized enterprises (SMEs) took 44 days to settle their accounts in the first quarter of this year - translating into the slowest rate of payment since the second quarter of 2012, data from DP Information Group showed on Tuesday.

By comparison, the time taken by SMEs to pay their bills in the fourth quarter of last year was 42 days. A quarter before, it was 36 days.

Among the industries, financing companies had the biggest deterioration in the pace of payment, from 44 days to 51 days. The biggest improvement in payment behaviour came from the shipping and marine sector, where companies paid their first quarter bills 12 days faster than in Q4 last year.

"The trend is towards slower payments by SMEs but there are no indications yet that any sector is experiencing any critical issues. However, problems may occur if the trend continues throughout the year," said Lincoln Teo, chief operating officer of DP Info.

"As companies slow their payment speeds, their debtors are forced to do the same as they do not have the cash flow to make prompt payment. As a result, payments can slow across the board."

The data is based on a ratio known as Days Turned Cash (DTC), and measures the payment behaviour of more than 120,000 corporations and SMEs in Singapore each quarter.