A Singapore SME does not need to operate an overseas office to be affected by foreign exchange movements. A local business may buy inventory from a supplier in the United States, pay for software in US dollars, purchase machinery from Europe or receive payments from customers overseas. Whenever money needs to be paid or received…
For a GST-registered business, collecting money from customers does not necessarily mean that all of the money is available to spend. Part of the amount collected may eventually need to be paid to the Inland Revenue Authority of Singapore (IRAS) as Goods and Services Tax (GST). This can create cash flow pressure if the business…
A business may be profitable and still struggle to repay financing comfortably. The reason is simple. Profit alone does not show how much cash is available after the company pays its normal operating expenses. This is where the Debt Service Coverage Ratio, commonly known as DSCR, can be useful. DSCR compares the income or cash…
The amount a business borrows is only one part of a financing decision. Two financing offers can provide the same S$100,000 but have very different costs, repayment schedules and effects on cash flow. This is why SME owners should look beyond the advertised interest rate when comparing business financing. The true cost of financing can…
Many SMEs experience cash flow pressure even when sales are healthy. The problem is often timing. A business may complete an order, issue an invoice and record the sale, but still have to wait 30, 60 or even 90 days before the customer pays. During that period, salaries, rent, suppliers and other expenses still need…
A business can be profitable on paper and still experience cash flow pressure. One reason is timing. A company may spend money on inventory, materials or suppliers today, make a sale later, and then wait several more weeks before the customer actually pays. During that period, cash remains tied up in the business even though…
