According to the report by Singapore Commercial Credit Bureau (SCCB) on Tuesday (7 Jan), the slow payments have become worse among Singapore firms for the third consecutive quarter. This is especially the case in the retail and services sectors.
From Q3 to Q4 of the previous year, slow payments have risen by 2.46 percentage points to 39.75 per cent compared to the previous quarter of 37.29 per cent. When not more than 50 per cent of bills are paid within the agreed terms, that is considered as slow payment.
In four out of five sectors, slow payment is prevalent in the quarter on quarter comparison.
The largest increase in slow payments was is in the retail industry, rising by 4.33 percentage points to 38.8 per cent from 34.37 per cent. SCCB stated that this is mainly attributed to the increase in payment delays among sellers of home finishing and furniture, general merchandise and cars.
In addition to this, the services sector also experienced increases in slow payments by 3.49 percentage point from 36.42 per cent to 39.91 per cent. This rise is due to the increase in payment delays in the social services, customer services and recreational sub-segments, SCCB added.
In the construction sector, due to the increase in payment delays by special trade contractors, slow payment climbed up by 2.52 percentage points from 46.90 per cent to 49.42 per cent.
As for manufacturing, slow payments declined by 0.09 percentage point, whereas in wholesale trade, slow payments rose by 0.96 percentage point.
Prompt payment is defined as when at least 90 per cent of total bills are settled within the agreed payment terms. Partial payment, on the other hand, is defined as when between 50 and 90 per cent of total bills are settled within the agreed payment terms.
The overall picture shows that for the third consecutive quarter, prompt payment declined by 2.58 percentage points from 48.81 per cent in Q3 to 46.23 per cent in Q4. However, partial payments saw an increase of 0.11 percentage point from 13.91 per cent to 14.02 per cent.
Audrey Chia, the chief executive officer of Dun & Bradstreet (D&B) Singapore, believed that partial payments reached a new peak in 2019 despite the continued worsening of payment performance caused primarily by the rise in payment delays in the retail and services sector.
“This is a sign of companies taking steps to ensure that they remain creditworthy in the eyes of their creditors and not deferring their payments entirely,” added Ms Chia.
D&B is a giant in the commercial credit information industry as well business reporting. It is most famously known for its Data Universal Numbering System (DUNS numbers) that generate business information reports catering to more than 100 million firms all across the world. More than 1.6 million payment transactions of companies are monitored by D&B Singapore through the SCCB, from which these study figures are compiled.
