Delayed payments from customers remains key challenge for SMEs: SPRING survey

Delayed payments from customers remains key challenge for SMEs: SPRING survey

Michelle Zhu
18/12/17, 12:56 pm

SINGAPORE (Dec 18): Managing delays in customer payments remains as a key finance-related challenge for Singapore's small-medium enterprises (SMEs) even with easy access to debt financing, according to recent findings from the 2017 SME Financing Survey by SPRING Singapore. 

Now in its second edition, the 2017 SME Financing Survey involved over 1,800 SME respondents across various industries, revenue bands and stages of development, and was conducted by SPRING Singapore in partnership with Dun & Bradstreet between June and Sept this year.

This year’s findings revealed that a majority (90%) of the 13% of SMEs which sought external financing in the past year were successful in their applications.

These largely comprised larger SMEs, which SPRING says are more likely to seek external financing given their growth needs and higher approval rate for debt financing.

The most commonly cited purpose by over 60% of SMEs that sought external financing in the year to date was for cash flow management, with bank loans as the most popular form of external financing across SMEs of all sizes, industries and stages of development.

Meanwhile, micro companies with revenue below $1 million appeared to face lower approval rates, which SPRING attributes to the lack of financial documents and/or weaker business performance, such as insufficient revenue to justify the quantum of financing requested.

A majority 87% of SMEs surveyed which did not turn to external financing indicated that they had sufficient funds to operate, while a 9% indicated a personal preference not to borrow.

Nonetheless, it was found that three in five SMEs (64%) currently face some form of delay in receiving payments from customers, which they also continue to rank as the top-finance related challenge they expect to face in the coming year.

In a press release last Friday, SPRING Singapore highlights the issue of managing delayed payments as a consistent finding across various recent surveys and studies – including PricewaterhouseCoopers’ 2017 Singapore Working Capital Study, which showed that local businesses generally took about 41.5 days to convert working capital to revenue in terms of net working capital days.

See: Why size matters in Singapore's business environment

While acknowledging that external financing can help bridge gaps in payment cycles in the short-term, SPRING recommends that SMEs strengthen their cash flow management capabilities to improve their long-term resilience and competitiveness.

The agency also suggests that SMEs turn to other sources of help made available online, such as the PwC-SPRING Working Capital Study interactive tool, to benchmark their financial performance against industry peers.

“No business can operate successfully without effective cash flow management. Even profitable companies can go under if their cash flow is not well managed, which may result in them being unable to meet their financial obligations. To better manage cash flow, SMEs can put in place regular reviews and controls on financial reporting so that any potential issues with billing, cash collection and credit terms with customers can be promptly addressed,” comments Chew Mok Lee, Assistant Chief Executive, Capabilities & Partnership Group of SPRING Singapore. 

Counsel argue over how witnesses' conditioned statements were prepared and used

SINGAPORE (May 27): The prosecution and defence in the 2013 penny stock crash trial on May 23 crossed swords over how conditioned statements had been prepared and the relevance of questions raised in the cross-examination of these statements. Deputy public prosecutor Peter Koy said questions by the defence counsel for alleged co-conspirators John Soh Chee Wen and Quah Su-Ling were a “distraction from the facts”. “Questions as to what was shown to the witness, what trade and telephone data was shown to the witness and which data was filtered and shown to the witness are irrelevant t....


SINGAPORE (May 27): “We believe that the president of the US is engaged in a cover-up.” — US House Speaker Nancy Pelosi, following a meeting with other Democratic Party leaders on whether or not to impeach US President Donald Trump. Singapore and Malaysia suspend intercity rail project The construction of a $1.4 billion rail project linking Singapore and Malaysia’s southern state of Johor has been suspended until Sept 30. The move, which was announced on May 21, was mutually agreed to by both of the countries’ transport ministers. “This does not mean we are terminating the....

Entropica Labs aims to provide insights for health sciences using quantum computing

SINGAPORE (May 27): Quantum computing used to be considered a technology bordering on science fiction. But thanks to recent developments in the field, this next generation of computing is now closer to reality than before. This is opening up possibilities for many practical applications that have attracted the attention of both large corporations and entrepreneurial start-ups. One of the start-ups is Entropica Labs, which aims to develop quantum computing software to solve complex problems in the field of molecular biology. This would provide doctors with a better understanding of human phy....