11 JULY 2017: SME Financing News
A ccording to the Singapore Commercial Credit Bureau, companies have been quicker in settling their bills, such that the proportion of slow payments reached a new one-year low in 2Q 2017. Prompt payments are defined as bills where at least 90% is paid within agreed terms while slow payments have more than 50% of its value that is paid after the due date. So what are the implications for SME financing?
The data showed that delayed payments made up 38.5% of total transactions in the second quarter (compared to 42.6% yoy basis), while prompt payments accounted for 50.3% (compared to 45.9% yoy basis). The wholesale and retail sectors registered the smallest percentage of slow payments (around 34% each); while the construction sector had the highest proportion of slow payments at 45.2%.
The reasons for the improvement varied: for the construction sector – it was due to the pick-up in public residential and non-residential projects; for the retail sector it was due to the strong growth in luxury goods retailers that offset the weakness experienced by the F&B sector. However, D&B opined that it was premature to expect that the improvement seen in the construction sector would be sustainable for the rest of 2017. This was because private sector construction activities still remained in the doldrums and was not expected to show an improvement in the near term.
If you are operating in the sectors where payment is still relatively prompt and does not affect your cash flow needs, you have a fortunate situation. However, if you find that despite improved rates of slow payments, cash flow is still tight for settling your business expenses, then you will have to consider getting financing for your SME. Possible options include working capital financing and invoice financing or factoring.
The full report can be found at the website of Singapore Commercial Credit Bureau.
At IFS Capital Limited, we understand that all businesses are different in their needs and characteristics. That is why we are happy to consider SME financing options that meet your unique needs.
Why not drop us a note by clicking this form here and we can discuss this in further detail with you.
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