PROMPT payments declined to a new low in the third quarter of 2020 and accounted for less than two-fifths of total payment transactions, the Singapore Commercial Credit Bureau (SCCB) said on Tuesday.

This came as local payment performance deteriorated further in the same period, although some slight improvements were seen across certain sectors, the SCCB said in a press statement.

Prompt payments were down to 38.4 per cent, from 40.1 per cent in the second quarter and 48.8 per cent a year ago.

Slow payments accounted for more than two-fifths of total payment transactions in Q3, dipping slightly to 44.2 per cent in the period, from 45.8 per cent the previous quarter. Slow payments climbed from 37.3 per cent a year ago.

Partial payments meanwhile rose moderately to 17.5 per cent in Q3, from 14.1 per cent in Q2 and 13.9 per cent in 2019.

Audrey Chia, D&B Singapore’s chief executive officer, said the full impact of payment delays was more greatly felt in Q3 compared with the previous quarter as businesses continued to face cash flow woes.

The construction sector, in particular, saw a significant deterioration due to a temporary halt and a series of delays in project completion.

However, SCCB is seeing more businesses making concerted efforts to fulfil their debt obligations partially. While prompt payments have hit an all-time low, SCCB has seen an increase in partial payments being made by businesses over the previous quarter, she said.

“We would expect this trend of staggered payment plans to continue in the coming months,” Ms Chia noted.

The construction sector saw the largest quarter-on-quarter (q-o-q) increase in payment delays – which accounted for more than half of total payment transactions. Slow payments rose q-o-q to 56 per cent in Q3, from 52 per cent in Q2 and 46.9 per cent a year ago.

On the other hand, the retail sector saw a “visible improvement” in slow payments compared with the previous quarter, SCCB said. This was largely due to a fall in slow payments by retailers of general merchandise, food and beverage as well as apparels and accessories.

Slow payments for the retail sector dropped to 42.3 per cent in Q3, from 51.2 per cent in Q2. However, slow payments “climbed significantly” from 34.5 per cent in 2019.

D&B Singapore compiled the figures by monitoring, through the SCCB, more than 1.6 million payment transactions of firms.

Prompt payment refers to when 90 per cent or more of total bills are paid within the agreed payment terms, while slow payment refers to when less than 50 per cent of total bills are paid within the agreed terms.

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

Source: https://www.businesstimes.com.sg/government-economy/prompt-payments-hit-new-low-in-q3-singapore-commercial-credit-bureau