According to a recent survey in Singapore, about a quarter of small and medium sized enterprises (SMEs) face delay in receiving payments from customers.
The survey was conducted by SPRING, Singapore in which 1,645 SMEs participated after which the findings were published.
SPRING Singapore’s assistant chief executive Chew Mok Lee said, “The customers are delaying payments to them and this affects cash flow. You may have sales, but if you can’t collect, it’s a big issue.”
The problem compounds for the companies that are engaged in project-based work that stretches over a longer period of time are also more likely to face such issues.
SPRING Singapore’s findings were released along with a separate report from the Institute of Singapore Chartered Accountants (ISCA) and SAP, which revealed that Singapore SMEs take 9.2 more days on average to collect revenue as compared to their global peers.
“Lack of know-how could be a reason why companies experience cash flow problems,” said Chew.
For streamlining the financial problems and offering help to SMEs, Chew added, “We have a support programme called the Capability Development Grant, that could actually help the company engage a professional to help the company to structure its financial systems.”
“I think it's very useful because it actually could help the company streamline the financial support – all the way from your ordering to your cash flow planning to your cash flow budgeting," she said.
Besides the Capability Development Grant, there are other schemes such as the SME Working Capital Loan and SME Micro Loan which provide help to the SMEs.
In addition to this, financial institutions in Singapore are also rolling out initiatives to better equip SMEs with financial management tools. Banks like DBS, OCBC, UOB and MayBank have various seminars and workshops that SME business owners can attend for financial management advice.