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Ensuring consistent cashflow and managing cost are the top business priority for SMEs: DBS survey

Felicia Tan
Felicia Tan • 3 min read
Ensuring consistent cashflow and managing cost are the top business priority for SMEs: DBS survey
Within the survey, “rising global interest rates” (50%) and “labour costs and availability” (43%) were ranked as SMEs’ top concerns. Photo: Unsplash
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“Ensuring consistent cashflow and managing cost” remains the top business priority for small- and medium-sized enterprises (SMEs) in Singapore with 62% of them indicating as such in DBS’s annual SME pulse check survey. The survey for 2023 polled 116 SMEs, says DBS.

The priority came amid the persistent challenges in the business environment at present.

Exploring additional new markets for their businesses and first-time overseas expansion with 33% and 31% of SMEs listing those as their top priorities were second and third among the overall SMEs surveyed. These priorities, which came along with the reopening of borders, were a contrast to the 75% who ranked these as their lowest priority in 2022.

This was followed by ‘hiring, retaining and upskilling manpower’ (29%), sustainability and greening their businesses (25%) and digital transformation and innovating new business models (21%), says DBS.

To achieve these goals, SMEs are looking for strong banking partners with 58% of them ranking a “trusted and reliable banking partner with a long track record of supporting businesses”, as most important. Only 1% of SMEs preferred a ‘purely digital banking partner’. The banking partner’s presence and infrastructure was ranked most important (42%) for SMEs’ expansion into new markets.

Within the survey, “rising global interest rates” (50%) and “labour costs and availability” (43%) were ranked as SMEs’ top concerns. This was followed by inflation (36%), the GST hike (26%) and supply chain disruptions (25%).

See also: Why banks need to understand complexities that are facing early-stage, fast-growing businesses, says HSBC

The majority of SMEs said that a return on sustainability (35%) was the main challenge in building a sustainable/ green business, followed by 27% and 19% who cited ‘cost of deployment’ and ‘lack of government incentives/ funding’, respectively. 16% of the SMEs said they did not know how to start building a sustainable/ green business, and only a small number do not intend to build a sustainable/ green business (4%).

“SMEs are the backbone of our economy and have weathered different business and economic challenges over the last few years. They are resilient and optimistic as our survey has shown. As they explore new markets and expand overseas with borders reopening, I am confident that our connectivity across the region with our rich ecosystem of partners, together with the respective Singapore government schemes, will provide the necessary support to propel them to the next level of growth,” says DBS’s group head of SME banking, Koh Kar Siong.

He cautioned that continued headwinds from rising global inflation and high interest rates will add to SMEs’ operating expenses so managing cashflow and liquidity needs, along with effective credit risk management, will be critical to their success.

On DBS’s digital capabilities, Koh adds that the bank has “developed algorithmic models powered by artificial intelligence and advanced data analytics that alert us to potential signs of trouble faced by our customers. With these capabilities, over 80% of at-risk borrowers, averted risk.”

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