Why Every SME Should Follow These Cash Flow Tips

Small- or medium-sized enterprises (SMEs) based in Singapore can often find managing company expenses to be a complex, daunting, and even frustrating task.

Business owners with limited manpower and resources may have difficulty ensuring the proper allocation of budgets and keeping track of payments – specifically, late payments, which can affect cash inflow, causing a negative ripple effect on cash outflow (i.e. payables). Steady cash flow is therefore critical for a business to manage their day-to-day operational needs, and respond to growth opportunities

The solution? A trustworthy credit line.

Elevate, a multi-product solution jointly built by CardUp and Funding Societies, offers not just a reliable credit line, but also a cashback-earning debit card, receivables and payables capabilities. This article will delve into the problems SMEs face, and explore how Elevate offers the perfect solution.

Table of Contents

• What Causes Unstable Cash Flows For SMEs
• How SMEs Can Ensure Steady Cash Flow 
• Elevate Features and Perks
• Conclusion

What Causes Unstable Cash Flow for SMEs

Having cash flow issues is, unfortunately, an inevitable part of doing business. One of the main reasons companies face unstable cash flow issues is due to late payments from customers. 

Late payments by customers have been on the rise in recent years. In a study done by Funding Societies, 58% of Singaporean SME respondents say receiving payment from customers is a critical business challenge.  As customer payments are the main source of revenue for most SMEs, late payments will have ripple effects throughout an SME’s operational process. 

These late payments can lead to a “cash flow gap”, which reflects the shortfall between the money they’ve received from customers (cash inflow) and the money they owe their suppliers (cash outflow).The bigger the cash flow gap, the more difficult it is to meet operational costs, pay suppliers, and even make essential investments for growth. 

This problem is further exacerbated in SMEs due to their minimal cash reserves. A JPMorgan survey found that the median small business holds only 27 cash buffer days in reserve. As SMEs are typically in their early stages of development and have relatively low profits, they are left with little surplus to build substantial cash reserves. As such, when customers delay settling their invoices, it disrupts the expected influx of funds, leaving SMEs short on cash to cover any immediate expenses. This can have dire consequences when trying to keep an SME afloat.

How SMEs Can Ensure Steady Cash Flow 

A business loan or a credit line are two great ways to bridge SME financing gaps. 

A business loan is a lump sum amount that a business receives upfront and pays interest on over the loan tenure. It often requires a lengthy application process, with lots of documentation, and one year plus commitment. 

On the other hand, a credit line is a credit facility that allows a business to draw funds more flexibly. It’s a better option for shorter-term funding and to boost an SME’s cash reserves when they experience unstable cash flows. 

Either way, having access to on-demand capital can give SMEs greater liquidity for their operational needs so they will be less at the mercy of late payments. This can help solve the issue of having a cash flow gap despite having outstanding receivable payments in the pipeline.

Elevate — A Cash Flow Management Platform for SMEs’ Financial Operations

Many SMEs are concerned with being able to secure business funding. With more flexible eligibility criteria and a broader range of high-quality product offerings, alternative sources of funding have started gaining popularity in recent years.

Elevate is one such example. This cash flow management platform allows you to access credit, track and manage cash flow, and get paid faster. With Elevate, a multi-product solution jointly built by CardUp and Funding Societies, you can gain access to a wide selection of financial products that can fortify your business’s cash flow. 

Elevate Credit Line

The first product in the Elevate lineup is the Elevate Credit Line. 

Elevate strongly believes that it should not take a long time to access credit. Especially for SMEs, time is of the essence. Having access to fast and reliable credit is therefore essential for responding to business needs and seizing growth opportunities. The Elevate Credit Line is designed with SMEs in mind, with approvals for credit lines given out as quickly as one business day. 

On top of that, upon opening an Elevate Credit Line, you can get up to 55 days of credit interest-free. This allows your SME to immediately meet its financial obligations and buy time before any interest charges are incurred. 

How the Elevate Credit Line Works 

Once the credit line has been approved, you will be able to draw down funds instantly in any amount of your choosing up to your approved credit limit. These funds will be transferred into your Elevate Account, which is safeguarded in a top-tier bank (meaning that you never have to worry about losing access to your money). It’s then at your disposal to spend either through free local FAST transfers or via the Elevate Business Cashback card. 

To sweeten the deal, you’ll also earn 1% cashback on all your business expenses made through your Elevate Business Cashback Card. These include spending on digital ads, software, courier services and more. It’s  also widely accepted, allowing you to spend on your card at any establishment that supports Mastercard. 

(If a credit line does not suit your business’s needs, you can also consider a business loan from Elevate’s parent company, Funding Societies. With options such as Micro Loans, Term Loans, Accounts Payable Financing and more, there is bound to be a cash flow solution for your SME.) 

Elevate Receivables and Payables

For more long-term cash flow management, Elevate Receivables and Payables solutions are here to help. 

In the current volatile business landscape, precise cash flow prediction is essential to keep operations running smoothly. 

Elevate Receivables solution was developed to help SMEs manage cash inflows by offering a smarter payment acceptance method. You can accept bank transfers (for free) or credit card payments (from as low as 0.01% per transaction*) by sending your customers a secure and unique URL. You can even automate payment reminders, saving your team a lot of man-hours and operational headaches, removing the need to chase for late payments. It is quick and simple to set up and all past, upcoming, and overdue payments are easily trackable via the central dashboard. 

On the cash outflow front, Elevate Payables allows you to pay anyone in over 120 countries at zero transfer fees. You can even automate your local payments so that you will never miss a due date. There are no transfer fees and the FX rates on international transfers are more favourable than than major banks.

Related: Funding Societies Lending Platform – Review for SME Borrowers

Conclusion

The key to maintaining a stable cash flow lies in having access to sufficient cash reserves and a comprehensive payment management system. Elevate offers not only a flexible credit line that can bridge the gap between any cash flow needs, but also a comprehensive suite of financial tools—including a business cashback debit card, receivables, and payables solutions —to ensure an SME’s operational system is performing at peak efficiency.

If you are interested in exploring how Elevate can support your SME’s cash flow needs, check out the Elevate Credit Line and Elevate Business Cashback Card today!

*0.01% fee applies on the first S$5,000 worth of credit card payments collected after which standard 2.6% fees for local cards and 3.3% for international cards apply. However, your SME is in control — you can choose whether to absorb the fees or pass them on to your customers. 

Elevate comprises six (6) main products offered by CardUp Pte Ltd, with some products being provided in partnership with third parties who will provide the regulated services under each product. CardUp is a major payment institution licence holder under the Payment Services Act 2019. Click here to learn more. 

This post was written in collaboration with Elevate (CardUp Pte. Ltd.). ValueChampion (part of AMTD PolicyPal) remains committed to maintaining our editorial integrity by providing the most accurate information and reviewing products with an objective lens. We strive to be an unbiased source of news and content, and are dedicated to helping our readers in their financial wellness journey.

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Cover image source: Unsplash