Firms slack off in bills payment for Q2

Slow payments ate up over one-third of total transactions due to deteriorating credit conditions.

Payment performance of local firms has deteriorated after an improvement from the previous quarter, Singapore Commercial Credit Bureau (SCCB) revealed. According to a report, prompt payments have accounted for less than half of total payment transactions whilst slow payments accounted for more than one-third of total payment transactions.

On a QoQ basis, prompt payments have fallen by 2.26ppt from 51.70% in Q1 2019 to 49.44% in Q2 2019. Year-on-year, prompt payments decreased by 0.11ppt from 49.55% in Q2 2018 to 49.44% in Q2 2019.

Slow payments inched up by 0.51ppt from 36.59% in Q1 2019 to 37.10% in Q2 2019. YoY, slow payments decreased by 0.08ppt from 37.18% in Q2 2018 to 37.10% in Q2 2019.

Meanwhile, partial payments rose by 1.74ppt from 11.71% in Q1 2019 to 13.45% in Q2 2019. YoY, partial payments inched up by 0.18ppt from 13.27% in Q2 2018 to 13.45% in Q2 2019.

From a sectoral perspective, QoQ slow payments have deteriorated across three industries wherein the manufacturing sector saw the largest increase in slow payments.

According to SCCB, slow payments within the construction sector improved slightly in Q2 2019 due to a decrease in payment delays primarily in building construction. Slow payments shrank by 0.82ppt QoQ from 47.72% in Q1 2019 to 46.90% in Q2 2019.

The manufacturing sector saw an increase in slow payments owing to payment delays by manufacturers of printing and publishing, leather products and tobacco products. Slow payments grew by 1.43ppt from 36.65% in Q1 2019 to 38.08% in Q2 2019.

Slow payments within the retail sector fell for the third consecutive quarter due to a decrease in slow payments primarily among retailers of general merchandise, food and beverage and building materials and garden supplies. Slow payments fell by 1.54ppt from 37.73% in Q1 2019 to 36.19% in Q2 2019.

Slow payments within the services sector increased for the first time after four consecutive quarters of decline, inching upwards by 1.28ppt from 34.49% in Q1 2019 to 35.77% in Q2 2019. “This was largely attributed to an increase in payment delays within the hotels and accommodation, education and social services sub-sectors,” SCCB said.

Payment delays within the wholesale trade sector increased due to an increase in slow payments by wholesalers of durable goods. Payment delays inched up by 0.97ppt from 34.25% in Q1 2019 to 35.22% in Q2 2019.

“The rise in slow payments for the second quarter of 2019 was largely due to weaker performance within the manufacturing sector and the overall deterioration in credit conditions. On the external front, challenges remain as the wholesale trade sector continue to face headwinds. However, compared to the same quarter in the previous year, the increase in slow payments is relatively marginal. It remains to be seen whether the payment performance will continue to worsen in the coming months.” said Audrey Chia, D&B Singapore CEO.