When Fintech companies initially joined the finance scene, their technology was dismissed by some while others felt threatened by the disruptive capability of Fintech. Fast forward to today, the impact of Fintech companies has been significant and banks have started to take notice. However, instead of competing head on with these companies, banks have begun to take a collaborative approach. This is a huge milestone when compared to traditional competitiveness. There are many issues that are evident in the traditional banking industry that have yet to solved and banks realize that fintech companies have the potential of finding solutions for these problems. In today’s day and age, it is of equal importance to adapt as well as to create growth. With this collaborative effort being emphasized upon, the future does indeed look exciting where more win-win situations are being created.
SMEs in Singapore have been tightening their credit terms over the years, effectively constraining the credit terms that any business can get from their suppliers. This leads to many cash-flow issues for many SMEs as they are having to pay their suppliers faster than usual. In order to solve this issues, SMEs need financing such as business loans which effectively reduce their profit margins. The article featured shows 3 different strategies businesses can take in order to adapt to the new tightening credit environment. These are namely tightening the credit terms with their debtors, invoice financing and increasing financing facilities early through either debt financing or equity injections. Interestingly, the best strategy proposed by the article is invoice financing. Invoice financing addresses the issue of tighter credit conditions directly. Businesses don’t have to risk antagonize their clients by insisting on tight credit terms and they can avoid getting business loans, making it a very useful asset in their strategic arsenal.