Singapore corporations are now paying their bills seven days faster than they were in the first quarter of 2014, according to Trade Payment Data released by the DP SME Commercial Credit Bureau.
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 – decreased from 43 days in Q1 2014, to 36 days in Q2 2014.
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 more than halved from 29 per cent to 14 per cent. Severely delinquent debts are those which are still unpaid 90 days or more after they were due.
Big improvements were seen in the payment times of the construction and credit-related industries. Both these industries were among the slowest payers last quarter.
The construction industry’s DTC fell from 61 to 57 days, while the DTC for credit-related companies fell from 78 days to 52 days.
According to Ong Siew Kim, Senior General Manager of DP Information Group (DP Info), companies have become more credit-conscious during the last quarter.
“Companies will always experience periods of fast payment and slower payments. However, when you have successive quarters where the money is slow to come in, it starts to have an impact on your company’s cash flow,” says Ong.
The credit-related industry saw the biggest improvement in payment speeds in the second quarter of 2014, after recording a blowout in payment times during the first quarter.
The blowout was caused by people increasing their expenditure on credit during the festive period (Q1) which leads to a higher rate of default and slower payments in the early part of the year, followed by a correction in the second quarter.”
The electronics sector recorded the biggest slowdown in payment speed with the time taken to pay a bill taking five more days on average.
"However, one poor quarter is no concern for alarm and this does not appear to indicate adverse conditions within this industry,” Ong said.