Singapore SMBs stay optimistic despite inflation and costs

Six in ten SMBs (61%) reported being impacted by inflation and rising operational costs.

Despite inflation, rising costs, and a tight labour market, Singapore’s small and medium-sized businesses (SMBs) remain confident and committed to growth, according to a new report released by global business platform Xero.

Six in ten SMBs (61%) reported being impacted by inflation and rising operational costs. Nearly half also cited shifting consumer demand (48%) and labour shortages (44%) as key concerns.

Meanwhile, late customer payments emerged as a major challenge, with 91% saying these delays have affected their operations.

Despite these pressures, nearly two-thirds (63%) of businesses saw revenue growth in the past year. A substantial 76% of respondents said they remain optimistic about the future, indicating strong confidence in their ability to navigate uncertainty.

Digital transformation has become a strategic focus, not just an operational upgrade. The report found that 82% of SMBs consider digital adoption a top priority, whilst 99% see digital tools as essential to their business. A further 99% said they are open to experimenting with new technologies.

Most commonly used tools include digital marketing platforms (56%), customer relationship management systems (54%), and cloud-based accounting software (42%).

Businesses cited better reporting (51%), faster decision-making (46%), and automation (46%) as primary benefits of adopting tech solutions.

Workforce investment remains strong. Nearly half (47%) of SMBs increased headcount in the past year, primarily to support business growth (69%) and fill vacancies (55%).

Wage growth was also notable, with 77% of businesses offering pay increases over the past year and the same percentage planning to raise wages again in the next 12 months.

Many SMBs still face gaps in financial visibility. Around half said they struggle with real-time access to financial data (52%) and consolidating information from various sources (49%). These issues pose barriers to producing accurate, strategic financial reports.

To improve cash flow, some businesses are turning to stricter credit terms (53%), imposing late fees (47%), or offering early payment discounts (43%).

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