The possible cure to SME’s cash flow issues: iPaymy
Many SMEs in Singapore seem to have a problem keeping a healthy cash flow. One of the primary reasons cited is the late payment by their customers, and generally, local businesses take approximately 41.5 days to convert working capital to revenue in terms of net working days.
To discuss the details of cash flow issues and how iPaymy, with their up to 55-day zero interest credit terms, could be the possible solution for SMEs in Singapore, we e-spoke with Mr Ethan Dobson, the CEO, and Co-founder of iPaymy to find out more.
Were there statistics that encouraged iPaymy to start operations in Singapore and how did this idea come about?
The idea was originally focused on helping consumers pay their monthly expenses like rent, using a credit card so that they could earn credit card rewards. The data that encouraged us to start this business in Singapore was related to high credit card penetration and usage of cards, as well as a large number of expats, points junkies, and other desirable market characteristics.
After launching the consumer business we quickly changed our focus to SMEs as we learned there was a much more interesting problem to solve, and much more value that we could deliver in enabling SMEs to make recurring monthly expense payments like rent, salaries, and invoices on their credit cards.
What are the common problems that SMEs face financially?
Most common is lack of available cash flow to meet payment obligations or invest in growth. There are many factors that contribute to this issue. Some are inherent to small business operations like the typical struggles that come with trying to scale an early business before profitability. However, there are external forces at play as well, like lack of access to loans and other traditional financing options.
How does having a healthy cash flow help businesses?
Cash flow provides options, which is extremely powerful for SME operators. Too often those who are running these businesses are making tough decisions based on a very undesirable working capital position, which ultimately results in slower growth, and the inability to act opportunistically as make or break moments arise. With cash in the bank, not only can you meet you planned growth milestones, but you can be ready to jump on opportunities when they occur, which is often a key factor in success.
If these problems were not tackled promptly, would there be a huge impact on Singapore’s economy and what are they?
There already is a significant impact on the economy. 99% of all enterprises in Singapore can be categorised as an SME. Imagine if all of these business operators had access to sufficient cash to maximise growth in their business? This would mean more spending, more hiring, more macroeconomic impact in the long-run.
Why is the payment period for the iPaymy set for 55 days?
This is based on the corporate credit card billing cycle. We don’t determine the payment period but help our customer leverage the existing payment cycle of their cards.
What if some SMEs do not repay their bills to iPaymy or pay them later than 55 days?
We’ve built the iPaymy solution to work on the existing credit card payment rails. Therefore, the process is one that is very familiar to our customers and does not create another layer of the process for them. It’s simple, just like paying for anything else with your credit card – travel, dinners, etc. Our customers can meet all of their monthly payment obligations upfront but defer actually payment until they receive their credit card statement.
iPaymy for Business is a secure and easy to use platform enabling SMEs to pay rent, salaries, invoices, and even corporate tax using the credit cards they already have in their wallet today. iPaymy acts as an intermediary by delivering payments to vendors while freeing up cash and providing access to interest-free credit, through their credit cards. This solves the delays and aggravations that come with traditional SME financing options. SMEs are able to schedule recurring payments, manage invoices, set payment reminders, and monitor payment status all from one dashboard on iPaymy. Previously, iPaymy was more consumer-focused, but their recent shift in the target market to B2B in 2017 arose from some of their consumer clientele who were also small business owners.
For more information about iPaymy, visit https://ipaymy.com/#works