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How SMEs In Singapore Can Utilise Invoice Financing For Business Growth


Market conditions in Singapore can be very challenging, especially with the market uncertainty looming over Singapore’s economic climate. But despite the economic uncertainty, small and medium enterprises (SMEs) in Singapore still have opportunities to grow with the proper financing aid.

Potential growth of SMEs

SMEs play a big role in Singapore’s strong economy. With over 219,000 SMEs in Singapore, these Small and Medium business firms contribute almost half of the country’s economic growth. But economic bumps have become a major setback for SMEs, forcing some SMEs to downsize their firms and limiting their business activities. But these challenges have done little to hinder the potential of small and medium firms. According to an article by William Hoofmann at valuepenguin:

Despite facing real challenges, SMEs in Singapore have a relatively positive outlook. The DB Info Group and Singapore Business Federation (SBF) SME Index, which tracks the expectations of small businesses, reached a two year high for the second quarter of 2018 (51.8). However, this index appears to occasionally lag behind SMEs’ performance. For instance, the index peaked in the fourth quarter of 2014, before two consecutive years of economic contraction for SMEs. This lag is intuitive, as businesses may expect current trends to continue.

Challenges faced by SMEs include tight competition with large corporations, rising costs, and limited access to proper financing.

Effects Of Limited Access To Proper Financing

Tight competition with large, more established companies and rising cost of labour and inflation are challenges stemming from the lack of proper cashfow and cashflow management.

According to the valuepenguin report, rising costs across all business aspects are clipping SME’s growth:

42% of Singapore’s SMEs reported that increasing costs had significantly harmed on their business. One example of rising business costs is the increase in the cost of labor. Businesses have faced higher costs as wages have continually grown faster than inflation.This has squeezed their margins, while the average value added per firm has decreased, making it more difficult to operate a profitable enterprise.

With inflation and wage increases hurting a business’ day-to-day cashflow, delays and setback in payments from clients make cashflow management even harder, leading to downsizing and even tougher opportunities to compete with larger companies.

Invoice Financing as a Solution to Financing Problems

Invoice financing is one financial solution that can help reduce the difficulty of cashflow and cashflow management. As a financial technology solution, invoice financing allows you to cash out your invoices earlier with the help of multiple funders.

Invoice financing works by utilizing your current invoice on hand. Through an online platform, you are connected to multiple funders, each with an independent credit assessment process, giving you more chances of being approved for early payment with the invoice as collateral.

Once your invoice has been assessed and approved by funders, you can request for payment so you can keep your day-to-day operations up and running. This eases up the pressure on suppliers that are dealing with trapped cash in the P2P cycle. With early payment from funders, suppliers would not have to worry about delayed payments and opens up the opportunity for business growth.


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Joseph Seah

Joseph Seah



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