Prompt bill payments by S'pore firms down quarter on quarter

Singapore

SINGAPORE companies were more tardy about paying bills in the first quarter of 2016, repeating the sharp uptick seen a year ago, according to a report by the Singapore Commercial Credit Bureau.

Overall prompt payments comprised 41.11 per cent of all business payments in the first three months of this year, an 11.99 percentage point drop from the 53.10 per cent in the last quarter of 2015. On a year-on-year basis, however, prompt payments improved by 2.07 points from 39.04 per cent a year earlier.

Slow payments increased to 46.58 per cent in the first quarter of 2016, up from 35.43 per cent in the fourth quarter of 2015. Year-on-year performance improved, however, with year-ago slow payments higher by 4.83 points at 51.41 per cent.

Partial payments also increased in the first quarter to 12.31 per cent, by 0.84 point quarter on quarter and by 2.76 points year on year.

The increase in the share of slow payments was seen across all five of the industry sectors tracked - construction, manufacturing, retail, services and wholesale.

The largest increase came in the construction sector, where slow-payment proportion rose by 12.61 points to 52.98 per cent on a quarter-on-quarter basis.

The smallest increase was in manufacturing, which saw slow-payment proportion rise by 9.47 points to 47.20 per cent.

"The deterioration in payment performance," said Audrey Chia, chief executive of D&B Singapore which compiles the figures, "should come as no surprise with the strong deceleration in payment delays which we have seen at the end of 2015.

"Last quarter also marks the very first time when slow payments across all sectors have risen in one year. Interestingly, we have seen a rising trend of partial payments being made over the recent quarters.

"In times of economic uncertainties, a partial deferment of payment may offer a viable alternative for firms to circumvent cashflow issues."

The sharp increase in late payments during the first quarter echoed a similar move a year earlier, when slow payments also increased by more than 10 points in the first quarter of 2015.

OCBC economist Selena Ling said that there was not enough data yet to determine whether the first-quarter numbers were part of a bigger trend or simply a seasonal phenomenon.

"You'll probably need to see a few consecutive quarters of increase," she said.

Ms Ling noted that other economic data did not suggest a major increase in default risk.

"On the ground, although there are complaints about high business costs and the tight labour market, so far in terms of the numbers that I've seen, like personal bankruptcy, I haven't seen anything major."