LOCAL firms improved their payment performance in the last three months of 2015 for the third straight quarter, with overall prompt payments coming close to a two-year high and improvements in slow payments.
According to Singapore Commercial Credit Bureau, 53.1 per cent of all payment transactions in Q4 2015 were prompt - defined as such when at least 90 per cent of total bills are paid within the agreed payment terms - slightly higher than the 51.05 per cent recorded in Q3 2015. This also compares favourably with the 50.07 per cent seen in the last quarter of 2014.
Companies also made improvements in slow payments. Such payments - where more than half of total bills are paid later than the agreed credit terms - dipped to 35.43 per cent in Q4 2015, 2.88 percentage points lower than in Q3 2015. Compared to a year ago, the fall was sharper at 3.46 percentage points.
All sectors excluding construction saw a quarter-on-quarter fall in slow payments, as the construction sector marked a slow quarter with muted public building activities across the residential, non-residential and civil engineering segments.
Commenting on the latest statistics, D&B Singapore CEO Audrey Chia said that improvements in overall payment performance could be a cyclical uptick, especially as the retail and services sectors rank in better sales and profit margin during the festive season.
She noted, however, that the improvement in payment performance has slowed down for the final quarter of 2015, and the fall in slow payments was relatively marginal compared to the improvements made in Q3.
"Given the multitude of challenges such as manpower constraints, higher office leasing costs and a muted external environment, local firms will have to contend with margin pressures and manage their cashflows accordingly," she cautioned.