Guide to cash flow & budgeting in Singapore
We explain what cash flow and budgeting mean, what the government expects from you, and how to organise these processes
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What Is Cash Flow?
Cash flow, simply defined, is the amount of cash or its equivalent that is being transferred in and out of the business. A cash flow is positive if a company has more liquid cash coming in rather than going out. It’s a show of company’s robust financial health.
Financial means of any business are distributed across many areas — for example, its assets, outstanding invoices, and investments. One of the surest ways to determine a company’s financial performance is checking its cash flow statements.
What is Budgeting?
A business budget is the financial plan of the company. It is an adjunct to the overall business plan which lays out, in numbers, what the company hopes to achieve that year in terms of money. It contains detailed and data-backed forecasts of annual projected sales, profits, revenue, and expenses of a company.
Why is positive cash flow important?
More cash in hand allows companies to settle their debts, pay shareholders and expenses, and invest in business growth. Every business must be diligent about recording and tracking its cash flow. Bills, expenses, invoices, installments, premiums, or incoming payments – big or small – must all be appropriately tracked. Most companies in Singapore use automated or freelance accounting services in Singapore to monitor and manage their cash flow.
What are the budgeting compliance requirements for Singapore businesses?
According to ACRA (The Accounting and Corporate Regulatory Authority) in Singapore, the documentary compliance for businesses in the country extends to filing of annual returns and financial statements in XBRL format.
One of the minimum requirements listed for the full XBRL report is the Cash Flow statement. While only selected elements from the cash flow statement are required in Singapore, the document forms an integral part of the business's overall financial documentations. Even in cases where a cash flow statement is not needed – such as with companies exempt from full XBRL reports – it is a fixed part of every organisation’s internal financial statements along with the income statement and the balance sheet.
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Why should business owners track their cash flow and work with a business budget?
Budgets and forecasts are an essential tool for running businesses efficiently and expanding it. It is a monetary depiction of an organization's strategy. Using budgeting and forecasting strategies allows business owners and managers to identify the resources needed to meet their goals.
In fact, an integral and critical part of every business budget is a cash flow forecast that predicts future sales figures, or the likely cash flow into and out of a company’s bank account in a year. It consists of information regarding cash from operations, cash from investments, and cash financing activities.
How can I manage my budgeting and cash flow?
Maintaining cash flow and budgeting information accurately is vital to ensure the smooth running of a business. And it can only be realized if the company invests in excellent bookkeeping practices. For this, you can either outsource your accounting services to freelance accounting and bookkeeping service providers in Singapore or pay for an automated budgeting app for your Singapore office. We do both: provide a software solution and a team of experts backing it up. You can always ask their advice in difficult matters while the platform provides accurate data and daily updates.