A new survey reveals that Singapore’s small and medium-sized enterprises (SMEs) are grappling with significant operational inefficiencies, with a staggering three-quarters (75 per cent) identifying financial reconciliation as a major pain point.
This challenge is a direct result of a fragmented digital ecosystem, which is pushing most businesses to seek new software-as-a-service (SaaS) solutions and driving demand for integrated platforms with robust reporting capabilities.
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The report, commissioned by Adyen (an end-to-end payments, data, and financial management platform), shows that while digitalisation is now a business baseline, many SMEs struggle to manage it efficiently. Although 64 per cent of SMEs rely on SaaS platforms, many use a patchwork of different tools, leading to data silos and complex workflows.
Nearly half (49 per cent) of platform users rely on more than one SaaS platform for reconciliation alone, with 24 per cent using two platforms and 15 per cent using three.
Reconciliation woes cost time and efficiency
The burden of reconciling payments is not felt equally. The problem escalates significantly with business size, affecting 87.5 per cent of medium-sized businesses (20-199 employees) compared to 67 per cent of small businesses (1-19 employees). The issue is most acute in the retail sector, where 81 per cent of SMEs report it as a major challenge, followed by hospitality and tourism at 73 per cent.
This operational friction translates into lost time. Singaporean SMEs spend an average of six hours weekly on accounting and payment reconciliation. This time commitment increases with company size, as medium-sized businesses dedicate seven hours weekly to accounting, two hours more than the five hours spent by small businesses.
Dissatisfaction fuels search for new platforms
This widespread inefficiency is causing high levels of dissatisfaction. The survey found that only 23 per cent of SME decision-makers are happy with their current SaaS platform and are not considering a change. The primary motivation for the majority who are open to switching is a desire for better tools to manage financial complexity.
The top reason for switching platforms, cited by 36 per cent of SMEs, is the need for better consolidated reporting. This feature is particularly crucial for medium-sized businesses, with 67 per cent ranking it as a key reason to switch, compared to 50 per cent of small businesses. Other significant drivers for switching include:
- More payment method options (15 per cent), crucial for meeting customer preferences.
- Better business lending options (14 per cent), which help manage cash flow and fund growth.
- Improved risk management tools (12 per cent) to protect against fraud and ensure compliance.
Industry needs shape tech priorities
Different sectors prioritise different platform features based on their unique operational demands. While consolidated reporting is the most important feature for 60 per cent of health, beauty, and wellness businesses, the retail sector places a higher value on adding new payment methods (39 per cent).
Meanwhile, the hospitality and tourism industry, exposed to risks like ticket scalping, prioritises risk management more than other sectors, with 33 per cent citing it as most important.
Investment in integrated solutions on the rise
Looking ahead, a vast majority of SMEs recognise the value of investing in better technology. About 72 per cent of local SMEs plan to invest in more SaaS solutions over the next 12 months to optimise their performance. Again, medium-sized businesses are leading this trend, with 88 per cent planning to increase their investment compared to 61 per cent of small businesses.
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