More payment delays hit Singapore firms in Q2; retail and services see worst jumps

SINGAPORE (THE BUSINESS TIMES) – Payment delays among firms in Singapore have risen for another quarter, with retail and services posting the highest jumps out of all sectors, amid the economy’s coronavirus-induced partial lockdown.

Slow payments, defined as those made at least 30 days above terms, increased to 45.78 per cent in the second quarter, up 3.2 percentage points from 42.58 per cent in the first quarter, which had marked a near three-year low, the Singapore Commercial Credit Bureau (SCCB) said in its latest quarterly report on Wednesday (July 1).

Year on year, slow payments were up 8.68 percentage points to 45.78 per cent in the second quarter of 2020.

“The deterioration in payment performance should come as no surprise as the economy came to a virtual standstill for the most of Q2 2020,” said SCCB chief executive Audrey Chia.

She added that it is still premature to determine if there will be an improvement in firms’ payment performance in the near term even with the gradual resumption of economic activities. “The cash flow situation for most firms is likely to remain tight. Hence, we would caution firms to continue exercising vigilance and prudence in their credit policies.”

Of the five industries studied by SCCB – construction, manufacturing, retail, services and wholesale trade – retail and services recorded the highest quarterly increases in payment delays.

It is also the retail and services industries’ highest year-on-year jump in nine years.

Within retail, slow payments increased to 51.22 per cent in the second quarter, up by 9.72 percentage points from 41.5 per cent in the first quarter. Year on year, the increase in slow payments was 15.03 percentage points.

The delays primarily arose among retailers of general merchandise, followed by retailers of food and beverage, and retailers of building materials and garden supplies.

Within services, slow payments were up 5.03 percentage points quarter on quarter to 48.35 per cent in the second quarter. Year on year, the increase in slow payments was 12.58 percentage points.

The delays were largely faced by the engineering services sub-sector, followed by the educational services sub-sector and hotels and accommodation sub-sector.

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