Question 1

What is cash flow and why does it matter for Singapore businesses?

Accepted Answer

Cash flow is the movement of money in and out of your business over a period of time. Positive cash flow means more money is coming in than going out; negative cash flow means you are spending more than you earn. Many profitable businesses fail because they run out of cash — for example, a construction company may have a S$1M contract but won't get paid for 90 days while still paying staff and suppliers each month. Monitoring cash flow is critical for SME survival, especially in Singapore's high-cost operating environment with significant fixed costs like rent and salaries.

Question 2

What is the difference between profit and cash flow?

Accepted Answer

Profit is an accounting concept — revenue minus expenses, including non-cash items like depreciation. Cash flow is the actual movement of real money. A business can be profitable on paper but cash-poor if customers pay slowly (high receivables), if inventory builds up, or if large capital expenditures are made upfront. Conversely, a loss-making business can have positive cash flow if it collects cash before delivering services (like gym memberships or subscription SaaS). Both measures are important — but cash flow determines whether you can pay your staff next month.

Question 3

How much cash reserve should a Singapore SME maintain?

Accepted Answer

The general guideline is 3–6 months of operating expenses as a cash reserve. For a business with S$50,000/month in fixed costs, that means S$150K–S$300K in reserve. During the COVID-19 period, many Singapore businesses found even 6 months insufficient. Higher-risk businesses (construction, project-based, high seasonality) should target 6 months; stable recurring-revenue businesses can operate with 3 months. Singapore government grants and SME Working Capital Loans can provide a buffer — but building a cash reserve before you need it is far preferable.

Question 4

What causes cash flow problems in Singapore businesses?

Accepted Answer

Common causes: (1) Slow-paying customers — B2B businesses with 60–90 day payment terms can experience severe cash crunches; (2) Rapid growth — counter-intuitively, fast-growing businesses often have cash problems because they spend before they collect; (3) Seasonal revenue with fixed costs — F&B and tourism businesses; (4) Large upfront costs — construction, manufacturing; (5) Poor pricing — not charging enough to cover all costs including cash timing. Solutions include invoice financing, shorter payment terms, upfront deposits, and SME working capital loans.

Question 5

What Singapore government support is available for cash flow problems?

Accepted Answer

Enterprise Singapore offers several schemes: (1) SME Working Capital Loan — up to S$500K, 5-year tenure, for operational cash needs; (2) Enterprise Financing Scheme (EFS) — government co-shares lending risk, lower rates; (3) Invoice Financing — borrow against unpaid invoices at 70–80% of value; (4) Temporary Bridging Loan (when activated during crises). For early-stage companies, Spring Seeds and Startup SG Founder grants (S$30K–S$50K) can also improve initial cash position. Apply through participating financial institutions.

Question 6

How do I read a cash flow statement?

Accepted Answer

A standard cash flow statement has three sections: (1) Operating activities — cash from core business (collections from customers, payments to suppliers and staff); (2) Investing activities — cash spent on or received from assets (buying equipment, selling property); (3) Financing activities — cash from loans or equity (taking a loan, owner injecting capital, repaying debt). The 12-month projection in this calculator focuses on operating cash flow, which is the most important indicator of business health.

Month	Inflows	Outflows	Net	Balance
Jan	S$50.0K	−S$44.5K	+S$5.5K	S$25.5K
Feb	S$50.0K	−S$44.5K	+S$5.5K	S$31.0K
Mar	S$50.0K	−S$44.5K	+S$5.5K	S$36.5K
Apr	S$50.0K	−S$44.5K	+S$5.5K	S$42.0K
May	S$50.0K	−S$44.5K	+S$5.5K	S$47.5K
Jun	S$50.0K	−S$44.5K	+S$5.5K	S$53.0K
Jul	S$50.0K	−S$44.5K	+S$5.5K	S$58.5K
Aug	S$50.0K	−S$44.5K	+S$5.5K	S$64.0K
Sep	S$50.0K	−S$44.5K	+S$5.5K	S$69.5K
Oct	S$50.0K	−S$44.5K	+S$5.5K	S$75.0K
Nov	S$50.0K	−S$44.5K	+S$5.5K	S$80.5K
Dec	S$50.0K	−S$44.5K	+S$5.5K	S$86.0K

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