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Small Business, Big Disruption









As Singapore goes Smart,

SMEs have to redouble their digitalisation efforts



Cashless payments. Sensors in lamp-posts. Delivery drones.

Singapore is on a Smart Nation drive, and small and medium

enterprises (SMEs) will play a key part.


As the economy strengthens in 2018 and cash flows improve, SMEs

have to continue adopting digital technology, experts said.

Jing Tan, Asia Region Chief Financial Officer at International SOS,

highlights the importance of investing in service quality, innovation,

and technology to stay competitive.

As early as 2008, the global medical and travel security services firm pioneered a digital

travel risk mitigation solution called TravelTracker. The app allows clients to quickly locate

and communicate with their employees especially in a crisis, and to render assistance if

required. In 2010, they also invested in a mobile app to provide business travellers with up-

to-date medical and travel security advice.


In 2016 alone, TravelTracker has helped more than 1,400 clients. The mobile app has also

sent 5.3 million pre-trip advisories to travellers to prepare them for their international trips.

“Investing in these digital solutions has led to an increase in the productivity and usage of

our services. We have also successfully demonstrated significant value to our clients in

terms of their return on investments (ROI),” Mr Tan said.


As travel becomes a mass market phenomenon, he is anticipating bigger opportunities, and

is innovating and enhancing the company’s services and solutions to meet clients’ needs.


International SOS’s digitalisation strategy extends to their back-end processes as well.


“In 2017, we began exploring digital payment solutions in China to better manage and to

automate our local and cross-border payments. We expect to roll this out in China in early

2018 and to other countries in Asia thereafter,” he said.


Castlery, an SME dealing in designer furniture, is also exploring new technologies in 2018.


“Opportunities include new retail technologies to drive customer engagement, sales, and

create delightful and differentiated experiences,” said Chief Operating Officer, Travers Tan.


Meanwhile, supply chain technologies can drive cost efficiencies that can be passed on to

customers, he said.


However, a big challenge is cost.

“Implementing new retail concepts like augmented reality and data-driven location-based

engagement is challenging and expensive as the technologies are not widespread yet,” Mr

Tan said.


Given the costs of implementing new technologies, SMEs need to maintain healthy cash

flows, said Celine Chua, Vice President and General Manager of Global Corporate Payments,

American Express Singapore.


“For SMEs to plan ahead, they need to focus on freeing up their lines of credit so they always

have funds to use for both short-term and long-term growth opportunities – including

digitalisation,” said Ms Chua. Ultimately, the rewards of digitalisation are worthwhile, said

Associate Professor Randolph Tan from the Singapore University of Social Sciences.


Digitalisation is an important avenue that will expand the market reach of SMEs, as well as

enable them to meet the needs of customers more effectively, he said.


Financial technology, or fintech, can also help plug the funding gap or solve issues in cross-

border payments.


“Digital technology can level the playing field between large multinational organisations and

SMEs, enabling the latter to exploit opportunities that have previously only been accessible

by larger firms,” he said.


SMEs with a focused digitalisation strategy can strengthen their long-term competitiveness,

Associate Professor Tan said. “A proper digitalisation strategy put in place early can keep

expansion costs manageable even as business opportunities grow.”


Why SMEs should digitise business payments


It might be easy to set up a business in an efficient economy like Singapore.


But due to the city-state’s small size and competitive environment, the cost of doing

business can be high, said Celine Chua, Vice President and General Manager of Global

Corporate Payments, American Express Singapore.


Ms Chua highlights how SMEs can stay ahead by using technology in three areas.


Managing cash flow digitally


There are many methods to make electronic payments. SMEs need to be aware of the pros

and cons of each.


For example, electronic fund transfers are convenient but do not help manage cash flow. This

is because funds are deducted instantly even while SMEs have other payment obligations.


On top of salary, rental and utility costs, they have to pay their suppliers within a month,

while waiting two to three months for payments from customers.


“There is a gap of 30 to 60 days that SMEs need to bridge with their own cash or shareholder

funds. This becomes a struggle in day-to-day operations,” Ms Chua said. By contrast, making

online payments with a corporate card helps SMEs pay their suppliers efficiently.


This allows businesses to negotiate for early payment discounts and gives them more lead

time to settle their payments. In addition, they can accumulate reward points and rebates to

offset their payments.


More efficient cross-border payments


Due to Singapore’s limited market, SMEs looking for growth need to expand overseas at

some point.


They then have to navigate a bewildering array of suppliers, which need to be paid in

different fluctuating currencies.


Traditional forms of payment like cheques, letters of credit, local currency loans and

overdraft facilities result in higher processing and payment costs.


Online payments save time and help automate payment processes.


One of American Express’ objectives is to make cross-border payments more efficient. This

can facilitate an SME’s attempts to grow abroad or engage overseas vendors, Ms Chua said.


“We want to keep cross-border payments fuss-free by keeping foreign exchange fees low and

allowing SMEs to make payments to their suppliers in foreign currency,” she said.


Increased productivity of internal processes


Technology can boost efficiency, and SMEs that use the latest workplace tools to manage

their resources can gain an edge, Ms Chua said.


For example, consolidating payments on one digitalised platform simplifies expense

management and offers full visibility of a company’s spending. This improves spend

forecasting and budget planning.


American Express also has a seamless approval process for cross-border payments, Ms

Chua said.


“Clients can designate two levels of approval and approval can be done online. There is no

need to wait for a director to be present to confirm an invoice or sign a cheque.


”Source: The Business Times © Singapore Press Holdings Limited. Permission required for



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