Despite a challenging operating environment, Singapore’s small and
medium businesses (SMBs) remain resilient and focused on growth through
digitalisation, according to a new report by global small business
platform Xero.
Polling over 500 owners and senior decision-makers
from SMBs in Singapore, the report found that six in 10 (61%) have been
impacted by inflation and rising costs, alongside changes in consumer
demand (48%) and labour shortages (44%).
Despite this,
Singapore’s SMBs continued to grow, with nearly two-thirds (63%)
reporting revenue growth and 77% reporting wage increases over the past
year. Nearly half (47%) increased headcount within the business,
primarily to support business growth (69%). Crucially, 76% of business
owners said they feel optimistic about the future.
"It’s exciting
to see such strong optimism and momentum among Singapore’s SMBs,
especially in a tough economic climate. Their continued investment in
people and technology shows just how focused they are on building for
the future,” said Koren Wines, MD, Xero Asia.
“That said, as
businesses continue to scale and grow, it’s important to recognise that
many still face operational barriers that can slow progress—whether it’s
managing cash flow, accessing real-time financial insights, or juggling
fragmented systems. Addressing these pain points and building stronger
digital foundations will be key to unlocking greater efficiency,
agility, and long-term success."
The report also identified
common operational challenges they will need to overcome, such as
strained cash flow from delayed payments.
91% of Singaporean SMBs
said late payments from customers have impacted their business. When
polled on typical payment timelines, nearly a fifth (18%) of businesses
said they received payments from customers in an average of 31-45 days,
with timelines stretching to 46-60 days for 7% of businesses surveyed.
To
increase the likelihood of timely payments, many SMBs have started
strengthening credit terms (53%), charging late fees (47%), and even
offering discounts to incentivise early payments (43%) in a bid to keep
cash moving.
According to the research, many SMBs still struggle
with establishing long-term, real-time visibility on their business’
finances. Eight in 10 (81%) Singaporean SMBs recognise the importance of
customisable financial reports that contain insights that may be useful
for regulatory compliance and strategic decision-making. However,
around half cite a lack of real-time access to financial data (52%) and
difficulty consolidating information from multiple sources (49%) as key
barriers to developing them.
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| Source: Xero, The State of Small and Medium Businesses - Singapore 2025. Average customer repayment timeframe. |
To overcome these operational challenges and support growth, Singaporean SMBs are actively using digital tools such as digital marketing platforms (56%), customer relationship management systems (54%) and cloud-based accounting or finance software (42%).
Almost all (99%) believe digital tools are essential to their business, while 82% cited digital adoption as a top or significant business priority. A further 99% said they were comfortable experimenting with or implementing new technologies, with the ability to generate better reports (51%), enhanced decision-making (46%), and automation of repetitive tasks (46%) topping the list of motivations driving adoption.
Said Wines: “Singaporean SMBs have shown a strong appetite for digitalisation—not just as a means to keep up, but as a deliberate strategy to drive growth and resilience. They increasingly understand that digital tools are not simply operational add-ons, but enablers that can transform the way they manage cash flow, streamline processes, unlock opportunities and respond to evolving market demands.”
“By adopting the right technologies, small businesses can gain deeper financial visibility, make faster, data-driven decisions, and build the agility needed to thrive amid uncertainty. This shift isn’t just about staying compliant—it’s about becoming future-ready.”
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Download The State of Small and Medium Businesses - Singapore 2025 at https://brandfolder.xero.com/NE531UQB/as/3fxggcx7bk96gxs5tpxwfrh/Final_State_of_Small_and_Medium_Businesses_-_Singapore_2025
