Payment performance further weakened in Q4 2019

The retail sector saw the highest increase in delayed payments.

The payment performance of Singapore firms have continued to deteriorate in Q4 2019 from the previous quarter, according to the Singapore Commercial Credit Bureau (SCCB). This marks the third consecutive quarter of decline.

Prompt payments accounted for less than half of total payment transactions whilst slow payments accounted for almost two-fifths of total payment transactions.

On a YoY basis, prompt payments inched up by 2.40 percentage points (ppt) to 46.23% from 43.83% in Q4 2018, but dipped 2.58 ppt QoQ from 48.81% in Q3 2019. Slow payments climbed 1.73 ppt YoY to 39.75% in Q4 2019 from 38.02% in Q4 2018. On a QoQ basis, it also inched up by 2.46 ppt from 37.29% in Q3 2019.

Meanwhile, partial payments slipped 4.13 ppt YoY from 18.15% in Q4 2018 to 14.02% in Q4 2019, but rose by 0.11 ppt QoQ from 13.91% in Q3 2019. This figure is said to be its new peak for 2019.

From a sectoral perspective, slow payments have moderated across the construction, retail, wholesale trade and services industries during the quarter.

The decline was led by retail where slow payments rose 4.33 ppt to 38.8% in Q4 2019 from 34.47% in Q3 2019, no thanks to a rise in payment delays by retailers of general merchandise, automobiles and furniture and home finishing.

The report added that retailers of general merchandise saw the largest increase in slow payments, up by 6.76 ppt QoQ to 42.5%. This is followed by retailers of automobile, which edged up by 5.72 ppt to 44% in Q4; and furniture and home furnishing store retailers saw the third largest decrease, up by 5.16 ppt to 42%.

In the services sector, slow payments were also up 3.49 ppt to 39.91% in Q4. This is its third consecutive quarter of increase, mostly owing to payment delays within consumer services, recreational and social services sub-segments.

The consumer services sub-sector registered the highest increase in slow payments, up by 18.81 ppt from 30.19% in Q3 2019 to 49% in Q4 2019, followed by the recreational services sub-sector, which inched up 10.12 ppt to 40% over the same period.

As for the construction industry slow payments climbed 2.52 ppt to 49.42% in the same quarter from 46.9% in Q3 2019, blamed on payment delays by special trade contractors. Slow payments in the building construction sector grew 2.16 ppt from 49.34% in Q3 2019 to 51.5% in Q4 2019, whilst slow payments within the heavy construction sector also rose 1.46 ppt from 44.36% in Q3 2019 to 49%.

The wholesale trade sector saw a marginal increase in payment delays, primarily due to the rise in slow payments by wholesalers of both durable and non-durable goods. It inched up by 0.96 ppt QoQ from 35.83% in Q3 2019 to 36.79% in Q4 2019. Slow payments in durable goods rose 0.22 ppt QoQ to 36.5% in Q4 2019, whilst payment delays in non-durable goods grew 0.99 ppt to 35.5%.

The manufacturing sector is the only industry that posted improvement in payments as slow payments slipped 0.09 ppt to 39.13% in Q4 2019 from 39.22% in the previous quarter, owing to a fall in payment delays by manufacturers of tobacco, chemical and leather products.

Manufacturers of tobacco products recorded the largest decrease, down 13.67 ppt to 33% in Q4 2019. This is followed by manufacturers of chemical products, which dipped 4.53 ppt to 31.5% in Q4, whilst payment delays by manufacturers of leather products fell by 3.98 ppt to 31.5%over the same period.