Singapore Sees A Dip In Prompt B2B Payments

In Singapore, fewer local companies settled their bills on time during the first three months of this year compared with the previous quarter, as an economic slowdown affected profitability and cash flow, according to a new report.

Companies initiated prompt payments on just 51.9 percent of their bills during the period, down from 57.7 percent during the final three months of 2013, data from the Singapore Commercial Credit Bureau show. It was the first quarter-to-quarter decline since last year’s second quarter. During the first quarter of 2013, prompt payments occurred 50.4 percent of the time, so this year’s same period represented a slight improvement.

“Despite a reverse in the uptrend from the preceding quarter, prompt payments are still well above 50 percent, which marks the second highest prompt payments made in three years in Q1 2011,” according to bureau’s report. “The weaker showing comes amid a moderation in local economic growth.”

The bureau also reported that late payments increased to 37.9 percent during this year’s first quarter, up from 32.8 percent the previous three-month period.

Construction had the highest proportion of late payments, at 47.7 percent, followed by retail at 46.4 percent.

The slight decline in payment performance was likely caused by the vagaries of the trade cycle, as local firms remain exposed to external headwinds and downside risks, reported Today Online, citing Audrey Chia, chief executive of research firm Dun & Bradstreet Singapore, which compiled the data.

The payment delays, however, do not pose a major risk, Chia noted. “Over the past four years, prompt payments have been on a general uptrend, possibly a reflection of greater corporate emphasis on practices to improve credit control and cash-flow management,” she said.

However, Today Online reported that construction companies are facing pressure due to labor shortages, higher foreign-worker levies and costly investments in productivity upgrades.

“In the retail sector, businesses continue to face cost issues, especially in terms of rental, which is now taking up to 32 per cent of overall costs, according to the Department of Statistics,” Victor Tay, Singapore Business Federation chief operating officer, told the publication. “There are no magic solutions that can solve payment problems, but companies need to better understand cash-flow management and refrain from overly aggressive expansion.”

During the quarter, Singapore’s economic growth slowed to 2.3 percent from 6.9 percent a quarter earlier, based on a quarter-on-quarter seasonally adjusted annualized basis, according to the country’s Ministry of Trade and Industry.