Small and medium-sized enterprises (SMEs) in the retail sector paid their bills more briskly last year, according to the DP SME Commercial Credit Bureau yesterday.

They took an average of 42 days to settle their accounts last year - three weeks faster than the 63 days taken in 2013.

The report also found that the number of retail companies with severely delinquent debts has seen a "dramatic reduction", from 41 per cent to 19 per cent.

Severely delinquent debts are bills that remain unpaid 90 days after they are due.

The faster payment speeds may have been forced on the retail industry by creditors and suppliers, said Ms Ong Siew Kim, senior general manager of DP Information Group.

"Creditors may place strict payment terms on companies if they feel the chance of default on a debt has increased."

She noted that the commerce-retail sector has had an "uphill battle" since changes to the foreign labour laws were introduced in 2013.

Firms are now forced to "wean themselves off cheap labour and find ways to improve productivity", while facing pressure from increased rental costs.

"That's why companies that extend credit to retail companies have become stricter in their lending terms, requiring faster payment of debts," she said.

Ms Ong added that the retail SMEs could also have had improved cash flow, enabling them to pay bills promptly.

The construction sector recorded the largest year-on-year drop in payment speed, from an average of 32 days in 2013 to 45 days last year.

A quarter-on-quarter comparison showed that shipping and marine sector firms paid their bills in 63 days on average in the fourth quarter of last year, up from the 54-day average in the previous three months - the biggest increase across the 14 sectors tracked by DP Information Group.

While the nine-day rise in the payment period is steep, speeds in the industry have now returned to the level of 2013, said the quarterly report, which looks at bill-settling times of more than 120,000 firms.

It added that smaller shipping and marine companies said falling oil prices since the middle of last year - and the expectation of more declines to come - may have added to cash flow constraints and caused the slower payment cycle.

"While the big players tend to be slower payers in lieu of more tedious payment processes, smaller players who are less able to fend (for) themselves in times of uncertainty also find an added pressure in their ability to make prompt payments," said the report.