Singaporean SMEs are collectively losing an estimated SGD800 million (US$596 million) annually by keeping idle cash in low-yield bank accounts, reveals a recent survey by wealthtech platform Syfe.
The survey polled 350 SME business owners in Singapore with cash reserves between SGD100,000 and SGD20 million.
The research highlights the difficulties SMEs face in optimising their cash reserves. Nearly half prioritise guaranteed returns (48 per cent) and value liquidity (45 per cent), which often leads them to traditional banking solutions that fail to maximise potential returns.
Vulnerability to economic disruptions
The survey revealed that the average Singaporean SME has fewer than 11 months of cash reserves to sustain operations during periods of poor performance, making them vulnerable to economic disruptions.
Rising interest rates, inflation and operational costs worsen these challenges, while internal issues such as delayed payments and supply chain disruptions further strain cash flow.
Diversified strategies preferred
The findings also indicate that SMEs prefer diversified strategies for cash management, balancing risk and returns. Popular methods include money market funds (43 per cent), standard business bank accounts (43 per cent), and fixed deposits (41 per cent).
Syfe estimates that SMEs could recover significant financial value from their idle cash by leveraging smarter cash management strategies that prioritise competitive returns and high liquidity.
In response to these challenges, Syfe has launched a tailored cash management solution that offers returns of up to 3.5 per cent with no minimum lock-in period, addressing the critical need for guaranteed returns and liquidity. Syfe Earn aims to support a diverse range of businesses, from sole proprietors to mid-sized enterprises across various industries, including consultancy firms, food manufacturers, education providers, churches and property management companies.
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