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The importance of quickly paying off debts

June 2013 | Servcorp

It's been revealed that 2013 is seeing firms in Singapore pay off their debts quicker and quicker, following on from record-low levels of payment promptness in 2011.

The statistics, revealed in a report from the Singapore Commercial Credit Bureau, showed that 49.82% of commercial transactions are being fulfilled within the payment terms agreed between corporate creditors and borrowers.

While this figure is still slightly below half, it's a marked improvement on the 32.79% of transactions that were properly fulfilled in this manner in 2011.

The main business benefit of paying off debts quickly for debtors should be fairly self-explanatory – doing so simply allows you a clear picture of your business finances, without the need to worry about pending payments.

On the other hand, if you're a creditor, then it's imperative that you're paid on time for the same reason. You can't make informed financial decisions or know the real state of your company's finances if you're still waiting on debtors to pay up, or have no guarantee that they're going to by a set date.

So what's the upshot of this for Singaporean business as a whole?

Well, the upshot is that by paying quicker you're encouraging business growth across the whole country. If your own finances are in order then quick payments allow you to take a step back and consider the most sensible options with regards to investments and the like.

Similarly, by paying up quickly you'll be able to allow your creditors to grow their business in the quickest fashion possible. While selfish business practices might indicate that this is none of your concern, the truth is that any Singaporean business expanding is good for the economy as a whole.

This is particularly prevalent if you've borrowed money from a bank based in Singapore.

Many businesses have been guilty of only seeing the smaller picture when it comes to paying off debts, and they hang around when the reality is they could do so a lot quicker.

Organise your finances in a way that'll let you pay creditors as quickly as possible, and you'll make things a lot easier for yourself while stimulating growth across the nation.

Published by: Susie Martin