How outdated financial solutions are fuelling the SME exodus

The SME exodus is not inevitable. It is sadly the predictable outcome of an outdated financial ecosystem. 

The numbers tell a sobering story. A record 3,000 food and beverage (F&B) outlets closed in Singapore in 2024 alone. 

This year is tracking much the same, with near-weekly closures signalling a wider small-business crisis.

It isn’t just F&B. Businesses across retail, services and trade are feeling the strain, too. As a founder who has watched talented entrepreneurs struggle with crippling cash flow challenges, I see a troubling pattern that extends far beyond rising rents and changing consumer habits. 

It is the predictable result of a financial system that systematically holds back the very businesses fuelling the economy. 

The cash flow crisis hiding in plain sight
Every week, I speak with founders who obsess over operational efficiency, optimising talent costs, negotiating supplier terms and perfecting their product. But when it comes to the cash sitting in their business accounts, they are earning returns that barely cover inflation whilst watching their runway shrink each month.

According to one study done earlier this year, small and medium enterprises (SMEs) in Singapore are losing more than $800m annually in potential interest savings. This is corroborated by our own internal data, which found that approximately 55% of funds are sitting idle in traditional business accounts, earning minimal returns. 

Collectively, that’s millions in under-optimised cash, earning fractional returns—even as inflation quietly erodes capital. 

Consider a startup with $200,000 in working capital. In a standard business savings account, that generates perhaps $200 annually. 
Put the same capital in properly structured treasury instruments, and it could yield $7,000 or more. The $7,000 difference could cover two months of rent for a small restaurant, fund a crucial marketing push during slow season, or simply buy the time needed to pivot when market conditions shift. Solving for this should be table stakes. 

Financial infrastructure that matches market reality 
Much of today’s small business crises are a result of a fundamental mismatch between how SMEs operate and how financial institutions have traditionally served them where competitive investment opportunities have remained difficult to access without substantial minimums or complex processes that favour larger corporations with established banking relationships. 

Indeed, professional money market funds demand million-dollar minimums that exclude most growing businesses. Meanwhile, investment platforms require capital lockups that entirely overlook the volatility of small business cash flow, especially in sectors where seasonal fluctuations can make or break a business.

We need to level this playing field—the current disparity is both unfair and economically irresponsible to the SMEs and startups driving job creation and innovation. 

Our government rightly champions entrepreneurship as essential to Singapore's economic future. We've built world-class startup ecosystems, offer generous grants and tax incentives, and positioned ourselves as an innovation hub. 

But if we're serious about supporting local businesses, what we need is a fundamental shift in how both SMEs and the broader financial ecosystem approaches this challenge. 

The path forward
Through my own experience, and hundreds of conversations with successful business owners, I’ve found that what early-stage companies and small businesses need is often very different to what’s assumed. 

To be clear, this is not about pushing SMEs into complex products or outsized risk. Founders need financial solutions built for their reality: simple, liquid, low-risk options that plug straight into daily operations without adding back-office burden.

Fortunately, that shift is already happening. The emergence of financial technology, including automated capital management solutions, tailored specifically to small business needs, is addressing some of these crucial pain points. 

Equally, progressive financial institutions are recognising the opportunity and partnering with fintechs to better serve SME treasury needs. Now we need more willingness and confidence from SMEs to embrace these solutions.

For their part, SME leaders must demand better. Research the alternatives, challenge your current banking relationships, and embrace the financial tools that can transform cash from a static asset into a growth engine. Every month delayed is more money left on the table. 

The SME exodus is not inevitable. It is sadly the predictable outcome of an outdated financial ecosystem. 

The entrepreneurs behind closed businesses were held back by a financial ecosystem that treats their cash as an afterthought. We have the technology and the economic imperative to change this.