Slow payments for Singapore firms hit one-year high in Q3: SCCB

THE payment performance of Singapore firms has worsened for another quarter, with slow payments hitting a one-year high in Q3, the Singapore Commercial Credit Bureau (SCCB) said on Tuesday.

That being said, the deterioration in payment performance over the past two consecutive quarters has been gradual, noted SCCB chief executive Audrey Chia.

Slow payments accounted for more than half of total payment transactions in the third quarter of 2021, rising to 44.93 per cent from 44.56 per cent in Q2 2021 and 44.16 per cent in Q3 2020.

Prompt payments, meanwhile, made up slightly more than two-fifths of total transactions. Quarter on quarter, prompt payments eased to 40.51 per cent in Q3 2021, from 40.76 per cent in Q2 and 38.39 per cent the year before.

Partial payments dipped slightly to 14.56 per cent in Q3, from 14.68 per cent in Q2 2021 and 17.45 per cent in Q3 2020. Despite the dip, Ms Chia said SCCB is still seeing a relatively healthy trend of partial payments being made.

"This is a reflection that firms are more prudent in not overextending themselves and minimising cash flow shortages," she added.

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Three out of five industries saw a rise in slow payments on a quarterly basis. The construction sector once again registered the highest proportion of slow payments, while the wholesale industry saw the greatest increase in slow payments quarter on quarter.

Slow payments in the construction sector stood at 56.14 per cent in Q3 2021, from 55.8 per cent in Q2 2021 and 56 per cent in Q3 2020. The building construction sector accounted for the highest proportion of payment delays.

Payment delays within the wholesale trade sector rose further due to a rise in slow payments by wholesalers of both durable and non-durable goods. The sector saw slow payments standing at 40.09 per cent in Q3 2021, up from 38.98 per cent in Q2 2021, but down from 41.29 per cent in Q3 2020.

Slow payments in the services sector also rose for the second consecutive quarter due to payment delays by personal services, hotels and accommodation, and membership services. Slow payments stood at 44.52 per cent in Q3 2021, from 43.72 per cent in Q2 2021 and 41.64 per cent in Q3 2020.

On the flip side, the manufacturing and retail industries saw a drop in slow payments.

The manufacturing sector saw a decline in payment delays by manufacturers of transportation equipment, electronics and instrument products. Slow payments dropped to 38.75 per cent, from 38.98 per cent in Q2 2021 and 39.55 per cent in Q3 2020.

Transport equipment manufacturers saw the most visible drop in slow payments, decreasing 5.4 percentage points to 58.35 per cent in Q3 2021 from 63.75 per cent in Q2 2021.

Payment delays in the retail sector stood at 45.17 per cent in Q3 2021, down from 45.3 per cent in Q2 2021 and up from 42.3 per cent in Q3 2020. This was largely due to a drop in slow payments by retailers of food and beverage, general merchandise, apparel and accessories.

Retailers of apparel and accessories saw the largest decrease in slow payments, dropping 1.25 percentage points to 53.55 per cent in the third quarter.

"Given the uncertainties in the developments of the pandemic, firms will have to continue to exercise more credit vigilance and enhancing their credit policies to keep their businesses afloat in the coming months," Ms Chia said.

SCCB is a subsidiary under Credit Bureau Asia Limited, a credit and risk information solutions provider in South-east Asia.

Prompt payment refers to when 90 per cent or more of total bills are paid within the agreed payment terms, while slow payment happens when less than 50 per cent of total bills are paid within the agreed terms. Partial payment refers to when between 50 per cent and 90 per cent of total bills are paid within the agreed payment terms.