Cause of delay: Late payments spike sharply in Q1

Construction sector singled out as “worst paymaster”.

Late payments abruptly climbed uphill for the first quarter of 2014, while prompt payments experienced its first decline in almost a year and dipped alarmingly by several percentage points.

A report by the Singapore Commercial Credit Bureau showed that slow payments have increased sharply by 5.04 percentage points, from 32.84 per cent in Q4 2013 to 37.88 per cent in Q1 2014.

Meanwhile, prompt payments have declined sharply by 5.81 percentage points quarter-on-quarter, sliding from 57.73 per cent in Q4 2013 to 51.92 per cent in Q1 2014.

The construction sector recorded the highest proportion of slow payments. The sector registered 47.66 percentage points last quarter, a 5.65-point rise from 42.01 per cent in Q4 2013.

The retail sector is a close second with 46.42 percentage points last quarter. It is the only sector which registered a decline in payment delays, falling by 5.25 percentage points compared to Q4 2013.

Here’s more from the report: 

Despite a reverse in the uptrend from the preceding quarter, prompt payments are still well above 50 per cent, which marks the second highest prompt payments made in 3 years in Q1 2011. The weaker showing comes amid a moderation in local economic growth.

According to the Ministry of Trade and Industry (MTI), local economic growth decelerated from 6.9 per cent in Q4 2013 to 2.3 per cent in Q1 2014 on a quarter-on-quarter (q-o-q) seasonally adjusted annualized basis. 

From a sectoral perspective, slow payments have taken a turn for the worse as the increase was experienced across 4 of five industries in Q1 2014. This stands in sharp contrast to the preceding quarter when only 1 of five industries experienced an increase in slow payments.

However, as with Q4 2013, payment delays were only experienced in 1 of five industries on a y-o-y basis. According to SCCB, the last recorded poor payment performance was observed in Q2 2013 when all five industries experienced an increase in payment delays.