Only 37% of SME debts were paid on time

This is the lowest level in two years.

Only 37% of small to medium enterprises (SMEs) have paid their debts on time in the second quarter this year, according to a study by DP Information Group (DP Info). This has been the lowest rate since Q2 2015, when the percentage of SMEs that paid debts on time reached 35%.

Payment patterns of more than 120,000 SMEs in Singapore were recorded during the said period. Meanwhile, the percentage of severely delinquent debts did not change at 14%, similar to Q1's number.

In a press release, DP Info general manager Sonny Tan explained, "SMEs expect an improvement in their sales in the second half of 2017. They are also keen to pursue business expansion by increasing their market share, targeting new markets or introducing new products and services. SMEs may be choosing to use their resources to fund business expansion instead of making prompt payments on their bills."

The time it takes for SMEs to make good to their debt also rose. The Days Turned Cash (DTC) National Average became 35 days in Q2 compared to last quarter's 31.

Only the manufacturing sector decreased its average payment time by a day.

Meanwhile, payment times for the transport/storage sector increased the most. This could be a result of diverting resources away from debt settlement, DP Info said.