Singapore SMEs face cash-flow squeeze as more experience payment delays: survey

MORE small and medium-sized enterprises (SMEs) reported that they have finance-related issues, due mainly to delays in payment from customers, according to findings from the 2017 SME Development survey by DP Info.

SMEs with finance-related issues jumped from 22 per cent in 2016 to 35 per cent this year, with the proportion increasing across all sectors. Sectors that are particularly affected include information and communications, transport and storage, as well as manufacturing.

Among the 35 per cent of SMEs with finance-related issues, the proportion experiencing delays in payments from customers skyrocketed from 14 per cent last year to 81 per cent in 2017.

Other finance-related issues affecting SMEs include higher interest rates for bank loans at 29 per cent, and suppliers tightening credit access at 22 per cent.

"The gap between supplier terms and the credit given to customers, along with slower customer payments, is increasing the risk of cash flow and working capital problems," said Dev Dhiman, managing director, South-east Asia & Emerging Markets for Experian, parent company of DP Info.

"However, delays and defaults can have a domino effect that causes more problems right through the SME ecosystem."

Aside from finance-related issues, other findings from the survey indicate that SMEs are adjusting to the labour market.

Concerns about manpower costs fell to 70 per cent this year, below the level it was when the foreign labour restrictions were introduced in 2012. This was down from 85 per cent registered in 2013.

There has also been a decline in the proportion of SMEs having difficulties hiring the staff they need, from 49 per cent in 2014 to 26 per cent in 2017.

More than 2,500 SMEs participated in the annual survey.