Companies' bill payments worsen for 3rd straight quarter
Economist cites slowing economy; manufacturing and trade-related services hit by US-China trade spat
Singapore
LOCAL firms' payment performance deteriorated in the last quarter of 2018, making for three straight quarters of worsening.
Their performance was also worse than that in the last quarter of 2017, said the Singapore Commercial Credit Bureau (SCCB).
Maybank Kim Eng's senior economist Chua Hak Bin attributed this poorer performance in bill payment to a slowing economy, and said he expected the situation to continue worsening in the early part of the year.
SCCB said in a statement on Monday that the number of prompt payments slid 4.48 percentage points quarter on quarter (q-o-q) to 43.83 per cent of total payment transactions in the fourth quarter last year.
However, slow payments made a slight improvement: there was a 0.92 percentage point q-o-q dip to 38.02 per cent of total payment transactions. Partial payments rose by 5.41 percentage points to 18.15 per cent.
From a year-on-year perspective, the performance of all the three payment classifications worsened. Prompt payments were down 6.57 percentage points; slow payments rose by 1.1 percentage points and partial payments, by 5.47 percentage points.
Prompt payment refers to when 90 per cent or more of total bills are paid within the agreed payment terms; slow payment is defined as when less than half of total bills are paid within the agreed terms. Partial payments are when between 50 and 90 per cent of total bills are paid within the agreed payment terms.
Among the five sectors, manufacturing and wholesale experienced slightly weaker q-o-q payment performance. By contrast, the construction, services and retail sectors recorded improvements.
Dr Chua, referring to the slowing economy, said the manufacturing and trade-related services sectors were feeling the pain of the trade tensions between the world's two largest economies.
"The growth downturn is hurting company cash flow and timeliness of payments. Manufacturing and trade-related services have been harder hit by the US-China trade war and the global electronics slowdown. Both manufacturing and wholesale trade are therefore seeing greater stress in payment performance."
His expectation that payment performance will worsen in early 2019 comes from the signs of a significant slowdown in global growth, particularly in China.
The weaker payment performance in the manufacturing sector was a result of an increase in payment delays by manufacturers of petroleum and coal products, machinery and apparel.
Payment delays in the wholesale sector were the result of an increase in payment delays in the wholesale trade of durable goods.
Better payment performance in the building construction, heavy construction and special trade contractors sub-sectors contributed to fewer slow payments in Q4 2018.
The improvement in payment performance in the retail industry came from the general merchandise and food and beverage sectors.
In the services sector, the consumer services, health services and social services sub-sectors recorded fewer payment delays.
Payment data was furnished by local firms operating through SCCB and from the more than 1.6 million payment transactions monitored and compiled by the bureau's operator, D&B Singapore.
