After several quarters of slowing payments, Singapore's small and medium businesses have started to speed up the rate at which they pay their bills, according to new research released by the DP SME Credit Bureau.
Based on more than 100,000 payments made during the final quarter of 2010, the research found local firms paid their invoices an average of six days faster compared to the same period in 2009.
The average time taken to pay suppliers in Q42010 was 54 days compared to 60 days in Q42009. Nine of the ten industry sectors delivered improved payment turnaround, with the food and beverage sector being the exception.
The decrease in payment times is a turnaround from the third quarter of 2010, when average payment times hit a 5-year high of 66 days.
The biggest improvement was in the commerce retail sector where payment times fell by 31%, from 78 days to 54 days. This is all the more remarkable given this sector had the slowest rate of payments of any sector a year ago.
The fastest payers were companies in the Communications/Logistics sector where payment occurs by the 43rd day on average, compared to 56 days a year ago. Manufacturing firms were the second fastest bill payers averaging just 49 days to clear a debt.
Food and beverage players bucked the trend with the average payment days blowing out from 51 days in Q42009 to 60 days in Q42010.
According to Ong Siew Kim, Senior General Manager of DP Information Group, this is quickest that Singapore businesses have paid their bills since January 2008.
“When more and more companies slow down their payments, it becomes a vicious cycle that spreads from one business to the next. Our experience has shown the majority of bankrupt companies slow down their payments before they hit the wall,” says Ong.
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