Singapore companies' long term debts dropped to 15%

Firms are better payors by year-end.

The percentage of severely delinquent debts owed by Singapore companies has dropped dramatically during the last two quarters. This is the key finding of the Q1 2013 Trade Payment Data released today by the DP SME Commercial Credit Bureau (the Bureau). The findings are based on payments made by more than 120,000 corporations and SMEs in Singapore each quarter.

The percentage of severely delinquent debts - those which are unpaid for more than 90 days - has been growing steady since 2011 to reach a peak during the third quarter of 2012 at 29 per cent. This means that just six months ago, nearly 30 cents of every dollar owed was more than 3 months in arrears.

The Q1 2013 Trade Payment data shows severely delinquent debts have nearly halved, dropping to just 15 per cent. Ms Ong Siew Kim, Senior General Manager of DP Information Group (DP Info) said the improvement in the level of severely delinquent debt was due to several factors. 

"Companies tend to be better payers towards the end of the financial year. We regularly see improvements in the fourth quarter as companies settle debts and square off their books." 

"We have also seen an increase in companies being more active in pursuing debts, either through professional receivables companies or by having their accounts staff chase outstanding amounts."

"It is also possible that a proportion of the debt has been simply written off when companies just give up chasing and accept the debt has gone bad."

"The best advice for SMEs concerned about bad debts is to share their payment data with other companies through a credit bureau. So if a debt doesn’t get paid, all the credit bureau's members can be alerted to it and can take preventive action," Ms Ong said.