Paying employees on time has become harder due to the pandemic, lamented Matthew Shia, owner of home-based bakery ONLYKAI. Due to supply chain and shipment delays, supplier deliveries are often not received on time, affecting the business’ ability to pay its staff.
“Production gets delayed. The constant worry about not having sufficient cash flow to tide us over bulkier supplier payments is always there,” says Matthew.
Matthew is not alone in facing the daily stressors of managing finances. Raynald Zhang, founder of local eyewear business Foptics, said that because its business’ sales come from various online and offline sources, keeping track of finances becomes difficult.
“We try to use digital means to make transactions as much as possible so most transactions are recorded correctly. There must exist a solution that can consolidate them for accounting to be done smoothly.”
A small and medium-sized enterprise (SME) owner usually wears multiple hats — from managing manpower and marketing to paying for rent and investing in research. All these need to be accounted for day in and day out.
A study by the Association of Chartered Certified Accountants Singapore last year showed that almost seven out of 10 small businesses had to cut or stop their spending due to pandemic woes. In another study, cash flow mismanagement was cited as a major reason why small businesses fail.
Several businesses Vulcan Post spoke to agreed that the biggest bugbear to business owners is cash flow. Without that, businesses have a low survival rate.
At times, even the most prudent business owner may run into cash flow problems. For example, despite not having received payment from the client, they still have to pay suppliers to keep the next project going.
“Salaries come into our consideration when cash flow gets tighter. As a business, we can’t have our employees working for us knowing that they couldn’t be paid on time. Even though we wish to increase our revenue generally and scale the business, we do not consider doing it at the expense of not making timely salary payments,” said Matthew.
How Flex is poised to help small businesses solve cash flow problems
Fortunately, the fintech boom in recent years has led to new payment and cash management offerings that give smaller firms greater access to working capital. Take Flex and its partnerships with Business Payments Solution Providers (BPSPs) CardUp and ipaymy as an example.
Flex, in partnership with Finaxar Capital ll, provides small businesses with a line of credit, approved in under 48 hours. This line of credit is provisioned on a Flex Visa physical or virtual card, with payments easily consolidated via a single platform.
Meanwhile, through CardUp and ipaymy, SMEs can tap on this line of credit to pay for expenses — such as rent, salaries, invoices, and even corporate tax — which was previously not possible via credit cards. This gives them an added option to not touch their cash resources at all.
Helping SMEs ‘flex’ their cash flow
Launched in 2021 by Singapore-based Finaxar Capital, Flex is a spend management solution jointly developed in partnership with leading payments technology company Visa.
Helmed by Group CEO Dr Tan Sian Wee, the business — which is currently in the process of obtaining a licence with Singapore’s central bank — is backed by many venture capital firms, including Monk’s Hill Ventures, 500 Startups, and Cathay Venture.
“We digitise finance and provide an all-in-one spend management platform that enables businesses to regulate and manage their spending, and track their transactions,” said Flex.
“Business owners can also use Flex to dispense Visa cards to staff for work-related expenses like transport allowance.”
Traditionally, workers would have to send receipts and file a claim with the company, and that would take a few business days for the claims to be cleared before the worker is reimbursed. With Flex, small business owners can empower their staff to manage their own expenses, with the peace of mind that spend controls and full visibility provide.
Today, SMEs can issue unlimited Visa virtual cards, and up to 20 free Visa physical cards with Flex. Transactions made can also easily be tracked on the app by an administrator, which ensures transparency on finances.
Business owners can also set spending limits on the Visa cards or freeze cards when required, the fintech firm notes.
“Payments made with a Flex card can be drawn down from the credit lines extended by Flex through its partner, Finaxar Capital ll. Known as Flex PLUS, the credit line offers an interest-free payment term for up to 35 days, a resource that small business owners can tap on,” added Flex.
“The amount of credit can range from S$5,000 to S$500,000, with approval given in as fast as 24 hours, or within 48 hours depending on the amount required by the business owner.”
If a customer is unable to make payment in full, a three per cent monthly interest is charged on the outstanding amount. This is similar to credit cards at traditional banks.
Tapping on BPSPs to unlock “funds”
ipaymy is a Singapore-based firm that has presence in other countries like Australia, Hong Kong, and Malaysia.
It lets customers pay their largest expenses by credit card. This eases the burden on payments that usually require only cash, like shop rent, workers’ salaries, and tax payments.
SMEs get to meet monthly payment obligations while keeping cash available to fuel growth, said ipaymy.
“For example, office rent is usually collected in cash. With ipaymy, users can tap on the service to unlock cash to pay for shop rent.”
“What they need to do is to simply input their credit card information, choose a payment category, fill in the required information, and have the payment dedicated for rental made in as little as two business days,” it added.
While the payee receives the funds from ipaymy two working days later, the payer only needs to settle the amount once their credit card statement is due.
Paying with their card also enables users to tap on credit card rewards and cashback from banks.
“The best way to manage cash flow is to know where all your cash is going and budget accordingly. Always plan ahead and make sure you have a steady runway. Having a credit card helps as you’ll be able to have a longer timeline to work with,” said Tze Hing, founder of e-commerce business Subtle Asian Treats.
SMEs that set up a business account can also get a dedicated account manager, and the manager can act as an extended service line to quickly address businesses’ everyday needs.
Other benefits of ipaymy include scheduling recurring payments, managing invoices, and collecting payments, all in a single dashboard.
Similarly, CardUp, another BPSP that Flex partners with, allows business owners to manage both payments and collections on one easy-to-use platform. CardUp is also licensed by the Monetary Authority of Singapore as a Major Payment Institution under the Payment Services Act.
Flex as the all-in-one financing solution for SMEs
Through Flex, SMEs can manage and track the expenses of workers by issuing them Visa virtual or physical cards. They can also set limits to payments to prevent overspending.
What’s more, by tapping on the credit line with Flex via Flex PLUS, this interest-free payment term of up to 35 days helps give an additional boost in cash flow.
With ipaymy and CardUp, business owners can go a step further by placing their Flex Visa Cards on the platform. This allows them to tap into unused credits for cash-only purchases.
SMEs can also tap on the BPSPs’ all-in-one dashboard to ease their operational tasks. They can schedule recurring payments, manage invoices, and monitor payment status on both platforms.
Most importantly, the resources for working capital are expanded and there’s more cash liquidity.
From setting up a Visa physical or virtual business card to managing business workflow, tracking business expenses, to paying suppliers, Flex and its partner BPSPs are complementary as they provide businesses with better cash flow.
With the processing fee for both pegged at 1.8 per cent per transaction for a limited time, users can enjoy greater savings. Interested SMEs can sign up for Flex in just 10 minutes here.
*The article has been updated to include Flex’s partnership with CardUp.
This article was written in collaboration with Flex (ipaymy).
Featured Image Credit: Flex ipaymy