Singapore building firms struggle as overall slow payments in Q1 hit high since 2016

Singapore

SINGAPORE firms have registered their worst payment performance since the third quarter of 2016, and the downtrend is expected to continue as firms are exposed to a higher risk of payment delinquency in the months to come, the Singapore Commercial Credit Bureau (SCCB) said in a report on Monday.

"The marked deterioration in payment performance is a clear sign that firms are struggling to meet their debt obligations with creditors," said Audrey Chia, chief executive officer of D&B Singapore, which SCCB operates under.

Prompt payments plunged 8.5 percentage points year-on-year (y-o-y) to 43.20 per cent from 51.70 per cent while on a quarterly basis, it had fallen 3.03 percentage points from 46.23 per cent.

The first quarter figure of 43.20 per cent for prompt payments was close to a previous low of 42.18 per cent in Q3 2016.

On year, slow payments jumped 9.21 percentage points to 45.80 per cent from 36.59 per cent. It had risen 6.05 percentage points from 39.75 per cent in the previous quarter.

Slow payments hit its highest percentage since Q3 2016, which had 46.37 per cent of Singapore firms reporting payment delays.

It was up across all five sectors but services and manufacturing saw the largest increases y-o-y.

Slow payments in services increased y-o-y by 9.19 percentage points to 43.68 per cent from 34.49 per cent, and was up 3.77 percentage points from 39.91 per cent on a quarterly basis.

This was due to a jump in payment delays within the recreational, hotels and accommodation and social services sub-segments impacted by the coronavirus pandemic.

Slow payments in manufacturing increased 7.15 percentage points to 43.80 per cent from 36.65 per cent y-o-y, while rising 4.67 percentage points from 39.13 per cent in the last quarter.

SCCB attributed this to payment delays by manufacturers of petroleum, chemicals, as well as lumber and wood.

The construction sector also struggled, as slow payments increased 5.78 percentage points to 53.50 per cent in the first quarter from 47.72 per cent a year ago. The Q1 figure was also 4.08 percentage points higher than the 49.42 per cent recorded in Q4 2019.

The increase was led by the heavy construction sub-sector, which had the largest quarterly increase in slow payments among sub-sectors - rising to 54.72 per cent from 49 per cent.

In SCCB's report, prompt payment refers to when 90 per cent or more of total bills are paid within the agreed payment terms, while slow payment refers to when less than 50 per cent of total bills are paid within the agreed terms.