SMEs’ debt settlement promptness crashed to three-year low in Q1

Firms took 44 days to settle debts.

Small and medium enterprises (SMEs) were less prompt with their debt payments in the first quarter of the year, a report by DP Information Group revealed today.

SMEs took 44 days to settle their accounts in Q1 according to the Days Turned Cash (DTC) National Average, a tool for measuring the number of days a company takes to pay its creditor once the debt is due.

This is the slowest rate of payment since the second quarter of 2012 when debts took an average of 46 days to be settled.

By comparison, the time taken to pay their bills in 4Q 2014 was 42 days and in 3Q 2014 it was just 36 days.

Lincoln Teo, Chief Operating Officer of DP Information Group noted that the deterioration in payment behaviour had occurred during the last six months.

“The trend is towards slower payments by SMEs but there are no indications yet that any sector is experiencing any critical issues. Right now there is no need for alarm; however problems may occur if the trend continues throughout the year,” Teo stated.