SMEs in Singapore could miss out on SGD $800m annually

Singaporean small and medium-sized enterprises (SMEs) are reportedly missing out on up to SGD $800 million annually by retaining their cash reserves in low-yield bank accounts, according to estimates from savings and investment platform Syfe.

A survey conducted by Syfe on 350 SMEs revealed several challenges related to cash management. A notable portion of these businesses, 48%, express a preference for guaranteed returns, and 45% prioritise liquidity. Despite these preferences, many SMEs continue to use conventional banking solutions, which may not be the most effective means of maximizing potential interest.

The survey highlights that the typical SME in Singapore has less than 11 months' worth of cash reserves, which could leave them vulnerable during economic downturns.

This potential vulnerability is exacerbated by rising interest rates, inflation, and growing operational costs.

Additionally, internal issues such as payment delays and supply chain disruptions further strain their cash flow.

The survey also found that SMEs tend to favour multiple strategies for managing their cash, aiming to balance the associated risks and returns. Popular methods include money market funds, standard business bank accounts, and fixed deposits, with each strategy used by approximately 43%, 43%, and 41% of the respondents respectively.

Jack Prickett, Chief Commercial Officer at Syfe, commented on the findings, "This data underscores the difficulties SMEs face in optimising their cash reserves."

"Many businesses are operating with limited financial buffers while external pressures continue to mount."

"At Syfe, we believe that SMEs deserve better tools and strategies to unlock the value of their idle cash. By empowering businesses with smarter financial solutions, we can help them build the resilience needed to navigate challenges and drive growth."

To address these challenges, Syfe has introduced Syfe Earn in collaboration with Wallex, a cash management solution intended to help SMEs better utilise their cash reserves. Syfe Earn aims to meet businesses' needs by offering competitive returns of up to 3.5% and allowing next-day fund accessibility without a lock-in period.

This initiative aims to allow SMEs to recover significant financial value from their dormant cash.

Syfe Earn caters to a wide array of businesses, ranging from sole proprietors to mid-sized companies across various industries. The product is already helping businesses, including consultancy firms, food manufacturers, education providers, churches, and property management companies, to generate returns efficiently.

The solution promises faster onboarding and improved liquidity, allowing businesses to commence earning returns within 24 hours and make next-day withdrawals.

Prickett elaborated, "Syfe Earn is one way we're helping SMEs build financial resilience."

"By turning idle cash into a growth engine, businesses can reinvest these gains into hiring, operations, or innovation - areas that directly contribute to economic growth."

Hiro Kiga, General Manager, Payments at M-DAQ Global and Co-Founder of Wallex, shared his thoughts on the initiative, "SMEs often operate with limited financial resources, making effective cash management business critical. We're excited to partner with Syfe to introduce this new feature, enabling businesses to transform their Wallex wallet funds into a steady, low-risk source of returns, while maintaining liquidity. This addition enhances our cross-border payments product line, offering speed, support, and savings."