Singapore SMEs lose $800M yearly in idle cash as banks fall short, Syfe reports

SINGAPORE: The city-state’s small and medium-sized enterprises (SMEs) are losing out on a staggering $800 million annually in potential interest by holding idle cash in low-yield bank accounts, according to a recent report from Syfe featured in the Singapore Business Review. Despite the financial pressures brought on by rising costs and economic uncertainty, many SMEs are not fully optimizing their cash reserves, leaving substantial value untapped.

A survey conducted by Syfe highlights that nearly half of SMEs prioritize guaranteed returns (48%) and liquidity (45%), but traditional banking solutions are often unable to provide both. As a result, these businesses are missing opportunities to enhance their financial stability in uncertain times.

The survey also revealed that the average SME holds less than 11 months of cash reserves, leaving it vulnerable to external shocks such as inflation and rising interest rates. Without adequate reserves, businesses risk being caught off guard by unforeseen disruptions.

When it comes to cash management, SMEs prefer a diversified approach. Popular strategies include money market funds (43%), standard business bank accounts (43%), and fixed deposits (41%). However, while these options are standard, relying solely on them can leave considerable financial potential untapped.

Syfe’s findings underscore the importance of exploring alternative cash management solutions that offer higher returns, helping businesses maximize their reserves during these challenging times.

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