A DIGITAL LIFELINE FOR SMALL BUSINESSES

Xero’s cloud solutions are helping local SMEs manage their financial and operational challenges.

Rising costs and declining consumer spending is a growing concern for small and medium-sized enterprises (SMEs) in Singapore. “As a small business owner, I understand firsthand the financial stress and emotional pressure that come with running a business, particularly during uncertain times,” said Mr Thomas Po, co-founder of online Japanese grocer Zairyo Singapore. “My greatest challenge was managing payments to suppliers and operational overheads during lull months. This often weighed heavily on my mind, causing some emotional distress.”     

Mr Po is not alone, with many small business owners in Singapore facing financial stress caused by a subdued economic environment and rising costs of living. A recent study by Xero, Money Matters: The Impact of Economic Conditions on the Cash Flow of Singaporean Small Businesses, revealed that an overwhelming 83 per cent of small businesses have faced cash flow problems in the past year. These issues have significantly hindered their growth, employment opportunities, and ability to innovate.

Financial strain has forced SME owners to make tough decisions just to stay afloat. Many, like Mr Po, have also experienced emotional turmoil as a result of their business challenges.     

According to Xero’s survey, half of small businesses in Singapore anticipate inflationary pressures to impact their cash flows severely or significantly. These concerns remain even with the Singapore government’s introduction of relief measures for SMEs at the start of 2024, and the country’s inflation rates expected to ease towards the end of that year.                          

“During periods of volatility, scarcity and uncertainty, cash flow issues are often magnified multifold,” said Ms Koren Wines, Managing Director of Xero Asia. “Delayed payments, for example, can disrupt supply chains, causing a waterfall effect that can make it challenging for Singaporean businesses to meet customer demands and fulfil orders, in addition to meeting their own financial obligations.”

Despite the challenges, many entrepreneurs are responding to the demands of a slowing economy with confidence. In particular, an increasing number of SMEs are turning to digital solutions to streamline their cash flow management. For instance, accounting software usage stands at 31 per cent among SMEs, while 30 per cent of these enterprises have adopted payment scheduling and reminders for better financial oversight.

Additionally, numerous entrepreneurs are leveraging digital solutions like Xero to enhance their cash flow management activities as they navigate difficult times. With real-time financial data and analytics, Xero’s platform provides a comprehensive view of the business landscape, supporting strategic planning and effective financial management.

“Digital solutions, like Xero Analytics Plus, give companies visibility and insight to identify opportunities and risks, as well as forecast earnings and identify shortfalls, helping them proactively manage their cashflow,” said Ms Wines.

Mr Po decided to integrate Xero’s digital solutions into Zairyo’s processes to address their financial challenges. This move has streamlined the firm’s accounting tasks and synchronised its sales invoices, resulting in significant time and resource savings for the grocer.

Xero’s features, including Short-term Cash Flow and Business Snapshot, have been essential for managing cash flow effectively and efficiently. These tools have enabled Zairyo to navigate economic uncertainties with greater confidence.

The real-time data and analytics dashboards provided by Xero also deliver valuable insights for informed decision-making. This allows the firm to respond swiftly to market conditions, optimise resources and pursue growth opportunities with greater agility. “Leveraging Xero’s solutions has alleviated many of the pressures we faced by providing clarity and control over our financial management processes,” Mr Po explained.

To help entrepreneurs like Mr Po, Xero launched the Xero Beautiful Business Community in Singapore to connect small businesses with opportunities to network, share learnings and leverage expertise on the topics and themes that are most important to them. Xero users can also access free, confidential counselling sessions via the Xero Assistance Programme (XAP) to help cope with mental health issues.

Xero’ comprehensive support and features offered through its platforms have made the software the partner of choice for many SMEs like Zairyo, ensuring that small businesses have the resources and tools to manage their finances effectively, as well as overcome the hurdles of today’s volatile economic environment.

Said Ms Wines: “Xero’s purpose is to make lives better for small businesses, their people and advisors and communities.”