27 JULY 2017: SME Loans and Financing News
A bout two-thirds of all SMEs did not pay their debts on time in 2Q 2017, according to the latest DP Information Group (DP Info) research report of 120,000 companies in Singapore. This is a higher proportion of SMEs compared to the previous quarter where about less than half failing to pay their debts on time. In fact, this trend of the proportion of SMEs delaying payments reached a two year peak in 2Q 2017. The main contributors to this trend were manufacturing and F&F/Hospitality companies where only 24% and 35% of them paid their debts on or before due date. The construction sector was next with only 38% of these companies paying their debts on or before due date. It was also noted that the construction sector had the longest payment period of 55 days in Q2 2017 (compared to overall average of 35 days), an increase of three days from the last quarter. Nevertheless, the sector showed the best improvement in terms of proportion of companies making timely payment (from 28% in 1Q 2017 to 38% in 2H 2017).
DP Info also reported that while this trend of delayed payments was evident, there was no overall increase in defaults (defined as unpaid 90 days or more after due date). So this meant that SMES were “taking longer to pay a debt, rather than experiencing an inability to make payment”. DP Info further reported that as SMEs expect better sales in 2H 2017, this means they could be seeking to increase market share by business expansion, focusing on new markets or launching new services and products. Therefore, their resources might have been used to fund business growth first over making timely payments on their outstanding debts.
The full report can be found at the website of DP Information Group.
This article above highlights the challenges faced by small businesses or SMEs where cashflows arising from customer payments are being dragged out over a longer period of time. Perhaps your SME business is enjoying some sales uplift from recent promotional activities or it is gearing up for more orders in the second half of the year. However, these benefits or plans may not materialise properly if your small business or SME has yet to receive the monies owed by customers. Perhaps you are are now considering what SME financing options might be suitable to tide over the cashflow tightness. Possible solutions can include working capital loan financing and invoice financing or factoring. We will be happy to discuss and come up with the optimal plan for your business.
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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