Debt Payments Among Singapore Companies Slow But No Major Concerns...Yet

The average time it takes a company to settle a debt has increased by four days during the first quarter of 2014, according to the latest Trade Payment Data released by the DP SME Commercial Credit Bureau.


The findings are based on payments made by more than 120,000 corporations and SMEs in Singapore each quarter.


The Days Turned Cash National Average (DTC) - a tool for measuring the number of days a company takes to pay its creditor once the debt is due – increased from 39 days in Q4 2013, to 43 days in Q1 2014.


The last time the DTC was above 40 was nearly two years ago in Q2 2012.


The percentage of severely delinquent debts - those still unpaid 90 days after they are due - also rose from 18 per cent in Q4 2013 to 29 per cent in Q1 2014.


However, according to Ong Siew Kim, Senior General Manager of DP Information Group (DP Info), there is no need for concern at this stage.


"DP Info's analysis shows the deterioration in payment behaviour is not across all industries."


"Construction and Credit-related companies recorded a larger than normal slowdown in the time they take to pay debts.  When you consider 10 of the 14 industries tracked showed improvements in debt payment behaviour, it is clear these two industries caused the DTC to increase."


"The Construction industry is experiencing some changes as the large Government infrastructure projects come to an end.  As one industry leader explained, the industry may be catching its breath after several boom years and companies are managing their cashflow while waiting to book new work."


"The Credit-related industry, which includes personal and commercial finance providers as well as unsecured money lenders, has experienced large jumps in the first quarter before, which indicates the increase may be seasonal.  For example, there was a 19-day increase in payment times by Credit-related companies during the first quarter last year, followed by a decrease in payment times in Q2 and Q3."


"Many people find they overspend during the festive period between Christmas and Chinese New Year, causing them to delay in payments to creditors. This in turn places pressure on the cashflow and debt payment patterns of the lenders," Ong said. 

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