LOCAL firms’ payment performance improved for the final quarter of 2023, with drops in slow payment across all sectors, said the Singapore Commercial Credit Bureau (SCCB) on Tuesday (Jan 2).

The Credit Bureau Asia unit noted that both prompt and slow payments accounted for slightly more than two-fifths of total payment transactions, similar to the previous three quarters.

On a quarter-on-quarter basis, prompt payments improved by 0.09 percentage point to 41.1 per cent in Q4 from 41 per cent in Q3. Slow payments fell by 0.1 percentage point to 44.2 per cent in Q4. Partial payments inched up by 0.01 percentage point to 14.8 per cent.

On the year, prompt payments slid by 0.03 percentage point to 41.1 per cent in Q4. Slow payments remained unchanged, while partial payments climbed 0.1 percentage point year on year to 14.8 per cent in Q4.

From a sectoral perspective, firms across all sectors registered improvements in slow payments, which is defined as less than 50 per cent of total bills being paid within the agreed terms.

Such overall improvement in slow payments occurred for the first time in two years since Q4 2021, SCCB’s chief executive Audrey Chia noted.

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Slow payments fell further within the construction sector, down 0.08 percentage point quarter on quarter, and by 0.28 percentage point year on year, to 55.3 per cent in Q4 2023. The heavy construction sector registered the biggest improvement on the quarter.

In the manufacturing sector, slow payments dropped 0.1 percentage point to 39 per cent in Q4 after six consecutive quarters of increase, due to a decrease in payment delays by manufacturers of electronics, chemicals and transportation equipment. On the year, however, slow payments among manufacturers jumped by 0.5 percentage point.

Payment delays in the retail sector also fell further, led by retailers of general merchandise, apparels and accessories, and building materials. It slid by 0.04 percentage point quarter on quarter to 43.2 per cent, and by 0.14 percentage point year on year.

Meanwhile, the services sector continued to register improved slow payments, led by decreased payment delays by business, health and consumer services. It dipped 0.1 percentage point on the quarter and by 0.2 percentage point on the year to 42.9 per cent.

Payment delays within the wholesale trade sector improved as both durable and non-durable goods wholesalers reduced slow payments. The sector’s payment delays fell 0.15 percentage point on the quarter, but increased 0.1 percentage point on the year to 40.4 per cent.

“Overall, firms have continued to make more prompt payments for the final quarter of 2023, Chia said.

“However, the average payment delays have continued to increase further for the second consecutive year in 2023,” she added.

The annual average proportion of slow payments rose further to 44.24 per cent in 2023 from 44.15 per cent in 2022. Prompt payments decreased to 41 per cent, while partial payments inched up to 14.8 per cent.

“Firms will have to continue to exercise more prudence in cash-flow management and credit control in the months ahead,” said Chia.

Prompt payment refers to when 90 per cent or more of total bills are paid within the agreed payment terms. Partial payment refers to when between 50 per cent and 90 per cent of total bills are paid within the agreed payment terms.