Local firms settled debts more promptly in Q2

Payment performance improved across all industries.

Local firms settled their debts more promptly in the second quarter, reversing a strong deterioration in payment performance in the first three months of the year.

According to Singapore Commercial Credit Bureau (SCCB)’S latest payment statistics, overall prompt payments rose to 45.92% in Q2, compared to 41.11% in Q1.

On a year-on-year basis, however, prompt payments fell to 45.92% from 48.47% a year ago.

Payment performance improved across five industries on a quarter-on-quarter basis. This stands in contrast to Q1 when all 5 industries experienced a deterioration in slow payments.

However, on a year-on-year basis, payment delays have increased moderately in 3 of five industries, compared to 1 of five industries in Q1 2016.

“We have seen marked improvements in the payment delays of local firms particularly in both retail and manufacturing. This is due largely to the spillover effects of an increase in tourist arrivals, mainly from China in the first half of the year as well as a reversal in certain segments of the manufacturing sector such as pharmaceuticals and electronics clusters.” commented Audrey Chia, chief executive officer of D&B Singapore, which compiles the survey.

According to SCCB, both manufacturing and retail sector experienced the largest y-o-y declines in slow payments by 9.17 percentage points and 6.22 percentage points respectively.

“However, due to a prolonged weakness in external trade and a softening in the business services sector, q-o-q improvements in payment performance for both wholesale and services sectors were relatively marginal compared to the other sectors. Hence, firms will have to continue to exercise credit vigilance before extending credit terms to their business partners,” Chia added.