Small and medium-sized enterprises (SMEs) are shifting from survival mode to growth mode as more look beyond cost-cutting to revenue generation, according to a new survey.
But it noted that cash flow issues could derail expansion plans as more firms experienced delayed payments this year, said DP Info's SME Development Survey.
It found that 35 per cent of SMEs suffer from finance-related issues, up from 22 per cent last year - the highest level since the survey began tracking the issue in 2011.
These issues were experienced across all sectors, but transport and storage, information and communications and manufacturing were especially affected.
Among the 35 per cent of SMEs with finance-related issues, the proportion experiencing delays in payments from customers skyrocketed from 14 per cent last year to 81 per cent this year.
It has overtaken higher interest rates as the biggest financing issue. That came in a very distant second place at 29 per cent. This was followed by suppliers tightening credit access at 22 per cent.
Mr Ho Meng Kit, chief executive officer of the Singapore Business Federation, suggested that drags in certain sectors could be the cause for the increase in delayed payments.
The gap between supplier terms and the credit given to customers, along with slower customer payments, are increasing the risk of cash flow and working capital problems, warned Mr Dev Dhiman, managing director of South-east Asia and emerging markets for Experian, parent company of DP Info.
"Cash flow constraints have the potential to hold back the growth strategies of SMEs... during the next 12 months," Mr Dhiman said.
Still, he noted it was good that findings show businesses still intend to focus on growth in the coming year. Mr Dhiman said: "SMEs are becoming increasingly customer-centric and moving away from the more inward-looking tactics such as cost suppression."
More SMEs are also turning to investments in technology to drive increased revenue growth through applications such as e-commerce platforms, data mining of customers and enhanced sales functions.
This year, 60 per cent of SMEs said they are using technology to reap revenue gains, compared with 48 per cent in 2015.
While manpower costs remain a significant challenge to SMEs, its relative prominence has eased, indicating that the adjustments that SMEs have made over the years in response to labour market changes appear to be working.
Percentage of SMEs suffering from finance-related issues this year.
Percentage of SMEs that suffered from such issues last year .
The proportion of SMEs facing difficulties with manpower costs has fallen to 70 per cent - its lowest level in five years.
This is significantly lower than the 85 per cent registered in 2013, after foreign labour restrictions were introduced.
There has also been a decline in the proportion of SMEs having difficulties hiring the staff they need, from 49 per cent in 2014 to 26 per cent this year. More than 2,500 SMEs participated in the annual survey, now in its 15th year.