Late payments and financial penalties squeeze security firms, raising risk of wage delays, say industry players

“We only get to know at the end of the month … then we write in an appeal, and they take time to address that appeal. Because of that, there is a further delay in us getting our payment.”

Mr Nathan said some clients also take well beyond the standard 30-day credit period to pay agencies, with delays sometimes stretching to three or four months.

Security agencies typically have to pay officers weekly or monthly regardless of whether they have received payment from clients, said Mr Nathan.

“If you do not empower the agencies by paying them on time, how do you expect them to pay the officers?” he added.

However, some managing agents adopt better practices by paying agencies first and resolving disputes over liquidated damages in the following month’s billing, he added.

Such arrangements help ease cash flow pressures while appeals are being considered.

COMPETITION LEAVES LITTLE WIGGLE ROOM

Security agencies often bid for contracts through tenders, but industry players say there is little room to offer lower prices because they must comply with Singapore’s Progressive Wage Model (PWM).

Introduced in 2016, the PWM requires employers to meet minimum wage levels and training standards for security officers.

“There’s a bidding war for every contract that is up there,” said Mr Nathan.

“If your operating cost is high, you need to factor that in. If your operating cost is low, you may be able to quote slightly lower than your competitors.”

Mr Nathan said higher wage costs, coupled with late payments and contractual penalties, can leave many agencies operating on thin margins.

He said agencies facing cash flow problems also risk losing officers to competitors that can pay wages more reliably, putting further pressure on smaller firms.