More local companies are struggling with overdue debt, reveals report

Over 1 in 3 firms reported long-overdue debts.

The promptness of local corporate payments deteriorated sharply in 2015, with half of firms reporting an increase in overdue amounts over the last year, according to the Asia Corporate Payment Survey by Coface.

The survey showed that over one in three or 35.2% of firm reported an increase in ultra-long overdue issues. Furthermore, 14.1% of companies—higher than 10.5% in 2014—reported average overdue times of more than 90 days.

“The survey details revealed that a much higher number of Singaporean companies suffered from a surge in nonpayment issues, which placed them under increased financial pressure,” the report noted.

There was a small increase in average credit terms in 2015. Average credit terms inched up to 55 days last year, compared to 54 days in 2014 and 50 days in 2013.

The report warned that corporate payments are unlikely to improve this year, with 68.2% of respondents saying that the economy is unlikely to pick up despite fiscal and pre-emptive measures.

“2016 is set to be another challenging year for the small and externally-oriented Singaporean economy. Singapore, also the Asian base for the world’s leading players in the commodities market, is now faced with a backdrop of low commodity prices and mounting global uncertainties,” the report said.

Corporate payments also deteriorated elsewhere in Asia. Approximately 7 out of 10 companies across the region experienced overdue payments in 2015. Over half of firms blamed customer financial difficulties as the main reason for late payments, followed by fierce competition impacting margins and lack of financing resources.