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More Singapore firms are being paid on time due to tighter credit terms: DP
MORE local companies are getting paid on time as they tighten up credit and pay more attention to collection.
The average number of days a company pays its bills is now 36 days in Q3, down from 39 days a year ago, said DP SME Commercial Credit Bureau on Tuesday.
According to the days turned cash national average (DTC) - a tool for measuring the number of days a company takes to pay its creditor after the due date - the 36 days in Q3 2014 is one of the fastest in the last five years. Q3's DTC of 36 days is unchanged from Q2. DTC was 43 days in Q1.
The DTC payment data is based on the payment behaviour of more than 120,000 corporations and SMEs in Singapore each quarter.
Said Ong Siew Kim, senior general manager of DP Information Group: "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."
Electronics SMEs showed the most improvement in payment speeds, taking an average of seven fewer days to pay a debt or 54 from 61, than they did in Q2 2014, the bureau said. The feedback from SME managers working in the electronics sector is that the uncertain outlook has prompted companies to pay more attention to payments as they fall due.
The construction sector is also paying faster compared to the previous quarter. Payment has improved at 52 days from 57 in Q2.
"The market for sales of new properties remains subdued, so creditors are paying more attention to outstanding invoices," the bureau said. The government infrastructure projects have boosted the earnings of sub-contractors in the construction sector, and with more money coming in, they are quicker to pay out their debts, it said.