Archives 2022

Environment, Social and Governance

Environment, Social and Governance, the three words now in most of the Board of directors mind.

Whether they know what these three words entail and cover and what need to be done is another matter.

So What is Environment, Social and Governance or commonly known as ESG?

The whole business world is talking about ESG and every company jumps onto the bandwagon.

Whether they really care or not is another matter, as long as the public see they produce long reports at the end of the year in their annual report especially those public listed companies, that mean compliance with the listing requirement.

In Singapore case, that means they comply with SGX listing requirement in terms of reporting.

Does the authority really check whether the companies comply with the requirement?

Or is it another publicity stunt done for the sake of showing compliance.

Businessmen will tell you ESG will increase their cost of operation, therefore, to comply with it, they need additional fund to do so.

Now on Environment.

Nowadays every one cares about the earth and trying to make sure climate change impact is at the minimum.

The big question is – is every one serious about this issue? environment?

Nowadays public listed companies are required to produce in its annual report on sustainability and diversity disclosure in the annual report,

So, does it help in improving the climate changes and save the EARTH?

For those who like to print the annual reports in hard copy, that mean more pages on the annual reports.

More pages in the annual report mean more papers being used to produce the annual report.

With the increase in pages in the annual report, the paper manufacturer needs to produce more papers, then they have to cut more trees in order to produce more papers.

So much for sustainability of environment.

The next question is whether the board members know what they are supposed to do on ESG?

It will be interesting to know as we can notice most of the independent directors on boards are not that equipped in the subject matter.

Every good learning issue start from home.

If we want to do good, we have to start somewhere.

Therefore, to really deal with ESG, every one needs to put in his share of the work.

People nowadays have the habit and mentality of this is no my problem, it is the responsibility of the authorities and the government of the day to take care of the environment issue, and in the broader sense, ESG.

Carbon emission is one issue which affect the climate.

So can the directors go to meeting without taking a motor vehicle?

walk up the stair instead of taking the lift, since lift use power to get it moving.

And the power is from power station which is using coal, fuel, diesel to generate, and the emission of carbon is an issue.

Now on the Social issue.

Most of the time, if you ask a company to shoulder social responsibility, they will just tell you the bottom line is more important.

The motto of we must achieve a positive bottom line at all cost is more important than anything else.

So now companies need to take care of the Social factor in the ESG.

What do the companies need to do in term of Social factor in ESG?

the Social factor is about how the company manage its relationship with its employees as well as the community in which it is operating.

The relationship between the employer and employees are evolving, especially in the last few years at the height of the COVID 19 pandemic.

How a company treats its employees, inspire the employees, up skill and engage the employees go a long way to decide whether the employers are able to retain the employees.

Nowadays employees will look at how the employers take care of the staffs to decide whether it is worth to continue working in that environment.

People are more aware of the surrounding and working environment especially after going through the pandemic.

Employees now more likely choose to work with an employer who has social responsibility and showing more humane touch.

Those whose main objective is to make as much as possible at the exploitation of the staffs will find difficulty in keeping good employees.

Therefore, to drive ESG forward, human capital is the main contributing factor, and driving force to determine whether your effort in achieving ESG target is reachable or not.

now let talk about governance.

Most people have an impression that governance is just making sure every thing is done according to the rules and regulations.

Actually governance entail larger area than this.

Having a strong governance structure allow a company to ensure its business ethics and transparency are more visible and can reinforce trust in its leadership.

If a company is able to put in place a good governance policies, this will make the Board executing its fiduciary responsibility easier and at the same time, this can also help to manage the cost of operation.

Most people do not realize a good governance can help to reduce cost of operation.

When facing hard time, most businessmen like to take the easy way by cutting the staff force, instead of finding ways to reduce cost other than the human cost.

Cutting human capital must be the last resort for a company facing hard time.

Unfortunately, cutting human capital is the first step most businesses do when facing hard time.

By doing so, they seem to have forgotten the ESG factors.

This is what I said earlier, a lot of ESG measures are just for show, merely to satisfy the government requirement, how it is implemented, does not matter at all.

After all, is there any penalties for not compliance with ESG?

How importance is human capital for an organization?

Businesses need to look at the followings if they really care about human capital:

  1. staff turnover.
  2. Staff development.
  3. Occupational health and safety.
  4. Gender diversity
  5. age based diversity
  6. training
  7. staff welfare and benefit.

If an organization fails to give the staffs a sense of belonging, it will not be able to hold on the staffs, especially those good staffs.

Sadly most bosses do not seem to understand the importance of human capital,

human capital as intangible assets have value shown in the financial report, if the bosses can understand the importance of it, then the ESG will be implemented properly and effectively.

In conclusion, ESG is here to stay and companies need to pay more attention to it.

What Now With The Collapse Of Crypto ?

With the recent problem of liquidity in cryptocurrency, quite a lot of people have their live savings wiped out.

So are we seeing the end of the crash?

Or we have not seen the end of the collapse?

For those who are heavily in cryptocurrency, there are lessons we can learn.

If you read the financial news in the last few weeks or days, all we encountered were shortage of liquidity in the crypto exchange.

One of the biggest exchange based in Singapore had to go into liquidation, after the Monetary Authority of Singapore reprimanded them for giving false information last month.

As the result of which, that crypto hedge fund plunges into liquidation and we are yet to see the financial impact.

For the l;last few weeks, the global digital assets’ sector is facing strong head wind after breakneck speed of growth.

Due to the breakneck speed of growth, a lot of investors decided to jump into the bandwagon and ride on the wave.

During the last few years, the growth of the global digital assets’ sector was amazing, a lot of cryptocurrencies exchanges platform were up and running.

However, no one seemed to care there was a serious lack of regulation to monitor and regulate the transactions in cryptocurrencies transactions.

How do we know which exchange platforms can be trusted?

There are so many cryptocurrencies exchange platforms nowadays, and there are also so many types of cryptocurrencies on the market at the money.

There are too many until one can not decide which one is the one we can rely on.

Are they regulated and by whom?

though governments all over the world tried their best to regulate cryptocurrencies, the problem is there are too many exchange platforms pop up everywhere and each claimed its own legitimacy.

Without knowing the full details of the one who is running the exchange platform, and just base on friends’ recommendation just because he or she has been using the platform, then the cryptocurrencies hype grow.

We will only know there is a problem when someone who tries to cash in and liquidate his position find out he is not able to do so, or the money he tries to cash out does not seem to come into his bank account promptly.

Then when he tries to call, then only realize you can only do so by contact the exchange online, the reality sinks in when he realizes that he is dealing with machine or robot.

Evolvement of cryptocurrencies.

Cryptocurrencies were supposed to be the alternative for money currency and note.

Instead of using monetary note to purchase goods and for consideration,

Cryptocurrencies especially Bitcoin, when it first started, it was supposed to replace the normal money note as the consideration of exchange of goods or services.

However, somehow it seems it became an investment instrument instead of the alternative of money notes.

Bitcoin has fallen from the high of US$67,000 to its current level of US$ 20,000.

The collapse of cryptocurrencies caught investors by surprise, and people are wondering whether we have seen the bottom of it.

is it the same as the crash of the DOTCOM case in the 2000?

The dotcom crash was due to the rapid rise of the US technology stocks fueled by the investments in internet based companies in the late 1990s.

The internet based companies hype made opportunists investors jumped on the bandwagon and rode to richness, so they thought.

Then the reality sunk in and the bubbles burst, especially when the element of speculation came into play.

So it seems we are seeing the same thing for cryptocurrencies hype, every one is rushing into this sector just like in the late 1990s.

At the beginning, we only had Bitcoin, then when people saw how fast Bitcoin value rose, investors rush in and companies being formed and new cryptocurrencies being issued.

Now there are so many times of cryptocurrencies, resulting in so many choices for investors.

It seems that history is repeating itself, with people rushing to form new cryptocurrencies and so on, just like the DOTCOM case when every one rushed to form new start up and so on.

During the DOTCOM crash, we had a lot of venture capitals funding the new startups, the same thing is happening in this cryptocurrencies case.

With capital markets throwing money in this sector, the game is very much different and every one is rushing to grow big and trying to capture the market.

It resulted in we are not able to identify which is speculative and which is genuine investment.

to make the matters worse, scammers also dip their hands into this and make some killings for their own purposes.

So, do we still invest in cryptocurrencies?

Just like the DOTCOM incident, after raining, sun shine.

Those who have the lasting power or having some extra in the reserve, can wait for the storm to blow over and start investing again in this sector.

Hopefully by then a proper regulatory body is in place to make sure proper accountability and transparency in this sector.

Perhaps, something along the line of stock exchanges like the DOW JONES or other exchanges, where you want to have your counter listed, you must go through certain scrutiny and meeting some strict criteria, then only the cryptocurrency is allowed on the exchange.

Then perhaps we need to have a proper exchanges instead of what we have where anyone who has some extra can form an exchange and allow trading on its platform.

The most thing to bear in mind is to eliminate the speculative investment in this sector and also filter out the scammers.

Anyone who wish to share his experience in this sector, please feel free to put in your experience in the comments section below.

Post COVID-19 Challenges

COVID – 19 and its impact
For more than two years, businesses all over the world faced the impact of COVID-19 pandemic, and the chaos it brought upon all of us.
IN the last two years or so, every way we saw the business needed to shut its door, as government gave the order that to do so.
This was an effort to contain the spread of the virus.

Every one was encouraged to stay at home.

The main objective was to stop the transmission of the virus in crowded places.
Due to this measure, a lot of businesses need to stop operation.

A lot of workers were lay off, some lost their jobs due to cash flow issue.

While others lost their jobs because the owners were not able to sustain the business operation.

The reason being the operation has zero income.

Government effort to ensure zero cases of COVID-19, resulted in a lot of businesses having zero income. so is this trade off a good measure?

Luckily most governments decide

  1. to ramp up the vaccination processes,
  2. come to their sense to live with the virus, and
  3. slowly opening up the economy again.

Are you ready to face the challenges of the re-opening of economy?

Some businesses, while during the isolation and tough measure of government in containing the spread of the virus, were taking measure in preparation of the re-opening of the economy.

  • the smart one would have reviewed, and made changes in their business operation.
  • Some start the automation of some of their processes.
  • Others decide to divert to some other more sustainable businesses,
  • more in tune with the demand and requirement of the new normal.

What are the  consequences of business not in operation for more than two years?

  1. Lose of good workers.

Due to the slow down in business, companies in managing cash flow, most of them will just lay off their workers, so with skeleton work force, now with the opening up of the business, new workers need to be recruited.

One good example I noticed in Singapore was the fast food chain – McDonald.

They seem to be going round to try to recruit staffs in anticipation of business on the upward turn, now that the government has decided to relax the rules.

  1. Cost in training the new recruit.

I spoke to one of the McDonald manageress, she said the new staff needed training and obtained the necessary food health handling certification before he or she can start the work.

That mean cost is involved.

  1. Take time to recruit new staffs

If a business only starts its recruitment now following the government announcement of the opening of economy and live with the virus, by the time you manage to get the new staff on board, it will be another month gone.

Then the new staff needs to get acquainted to the new work environment and the way how the new company work.

  1. Machinery need to be maintained.

During the two years shut down, some of the machinery might not be in working condition.

And now need to restart,

  • the company need to carry out maintenance, and
  • services to ensure the machineries are in tip top condition.
  1. Looking for new office space.

Some companies might have given up the extra work space during the two years closure.

Now with the re-opening, they have to look for new work space, hence need o incur extra cost

Did you do some preparatory work during the two years scaled down operation?

Some managements have foresight, while waiting for the economy to open up again, they have already gotten their plan in place.

So once the economy opens up, they can hit the ground running, and getting business in as others are just about to do the necessary adjustments to face the new normal.

One good example is Changi Airport.

Once the government announced the opening of the boarder, they just hit the ground and run.

We can see from the data, in the first quarter of the year 2022, the numbers of human traffic and cargo passing through Changi Airport.

The news reported that Changi Airport had the highest in both categories among all the airports in the region, or even in Asia, beating Hong Kong.

Businesses good at adapting and innovating, will have not problem in operating in the new normal.

During the two years, we see what are the businesses which can survive any crisis or emergency shutdown.

If the business operators can make the necessary adjustment, and implement the changes, there is no reason the business can not grow and improve.


Good management will always innovate, adapt and make necessary adjustment to face the challenges.

If you need help from us, you can click HERE

With the new normal, challenges ahead


How To Manage Cashflow Effectively Part III

We have covered the importance of cashflow and the differences between revenue and cashflow.

Also we noted what we needed to do in preparing a cashflow forecast.

Now we want to cover the most important part on managing cashflow effectively.

In managing cashflow, we want to make sure we have surplus cash available all the times.

Ways of ensuring effective cashflow management.

  1. Monitor the cashflow forecast closely.
  2. Ensuring billings are done promptly.
  3. Fully utilize the credit term given by the suppliers.
  4. Take advantage of the government incentive schemes.
  5. Keep minimum inventory.
  6. Implement effective debt recovery and collection.
  7. Review expenses regularly.
  8. Maintain a good financing line of credits.
  9. Cash in on the discounts offered by suppliers.
  10. Demand for deposit for big sales contract.


  1. Monitor the cashflow forecast closely.

When we have the cashflow forecast, we usually notice the following scenarios:

  • We forecast a positive cashflow.
  • control of payments over a period of time.

So, in reviewing the cashflow, be it a weekly cashflow or a monthly cashflow, we will compare the actual and the forecast.

Since we always forecast a positive cashflow, we will not have to worry if the following work out:

a. the actual inflow of weekly cash in more than that forecasted. (assuming we are doing weekly cashflow).

b. the actual outflow of weekly cash is less than that forecasted.

if the above two scenarios play out, we are very sure that we will have cashflow surplus.

Reason being since we already forecasted a positive cashflow in which the cash inflow is more than the outflow of cash, therefore if the actual inflow is more than forecasted, and the actual outflow is less than forecast, we will have super positive cashflow.

On the contrary, if the actual inflow is less than forecasted and the actual outflow is more than forecast, then we need to review and find out the reasons.

Hence, by monitoring the cashflow closely ,we are able to take remedial action promptly, and rectify any weaknesses in operation immediately.

2. Ensuring billings are done promptly.

No billing means no payment by buyers, and no payments by buyers, we will run into cashflow issue sooner or later.

To ensure the inflow is not disrupted, we have to ensure our billings for work and services done are sent out immediately the moment work or service is done.

3.Fully utilize the credit term given by the suppliers.

a good business will take full advantages the credit terms given by the suppliers.

This is basic good cashflow management,

The main idea is – don’t pay the suppliers promptly and make sure debtors pay you quickly, that way you will not have any cashflow problem.

Sadly a lot of times, we see the opposite happen.

Bosses in their efforts to get in good term with suppliers, will instruct to pay the suppliers promptly, usually even before the end of the credit period.

And some bosses did not even bother to chase the customers to pay up fast, worry by doing so, will offend the customers, and this makes the finance staffs’ job more difficult.

4. Take advantages of government incentive scheme.

A good management will always take advantages of the government incentive schemes available.

Government such as Singapore government always has some good incentive schemes to support the businesses, especially the small medium enterprises.

So, to have a more effective cashflow, it is quite useful to take advantages of the schemes.

5.  Keep minimum inventory.

This may be arguable for some people, for me I am not one who favor keep a lot of stocks.

Having less stock mean the holding cost will be lower, and less space required to keep all the stock items.

This in a way , will not hold up the cashflow.

However there may be a different school of thought especially after the post COVID-19 situation, that depend on what industry you are in.

For manufacturing outfit, keeping raw materials at certain level may be a good idea but excessive inventory? I doubt that is the way to manage the cashflow.


6. Implement effective debt recovery and collection.

Debt collection and recovery are very important for a business’ cashflow.

If a company has a lot of bad debts or long outstanding debts, this will affect the cashflow.

If the finance department is not able to ensure the debts outstanding is within the credit terms given, then it is about to review the debt collection system of the company.

7. Review expenses regularly.

Management should take time to review expenses regularly.

Especially when the weekly cashflow forecast vs actual analysis is done, any obvious signal of expenses deviation need to be investigated and assessed.

By reviewing the expenses, if the management can do away with some of the unnecessary expenses, it will go a long way in helping to improve the cashflow of the company.

8. Maintain a good financing line of credits

Though the company may be in good healthy cashflow position, it does no harm in having a good financing line of credits standby in case of emergency.

With the readily available financing line of credits, it will not be a stress but it does not mean the company can simply go out and spend lavishly.

Having the line of credit readily available is just some sort of insurance for the operation.

9. Cash in on the discounts offered by suppliers.

Suppliers may offer some discounts for the business, and any company which operate on prudent cashflow management, will definitely take advantage of that.

To some extent, the discounts offered may offer the business some help in the cashflow position, all the more crucial during the challenging time like now.

10. Demand for deposit for big sales contract.

whenever a company has a big contract or order, it is good that it can get some deposit from the buyer, this will ease the cashflow of the business in fulfilling the orders.

it will be even better if the company can arrange installment payment from the buyers.


Staying on top of the game in term of cashflow management is vital to the success of a business.

We should not let some missteps and miscalculation disrupt our cashflow management.

Take immediate action and rectify soonest possible, and you will not have to worry about cash crunch.

Always remember, take action, no matter how painful the action may be.


How To Manage Cashflow Effectively – Part II

Today we continue our discussion on how to manage cashflow effectively.

Having realized the importance of cashflow in a business, which in my opinion, is more important than profit.

We can have a very huge profit, however if it is not reflected in the cashflow of the business, then it is high time we take a closer look at the operation.

How do we prepare a good and accurate cashflow forecast?

To manage an effective cashflow, we need to ensure we are able to prepare a good and accurate cashflow forecast.

There are a few points we need to take care of in preparing the cashflow forecast.

  1. Identify the outflow and inflow of cash in the business.
  2. establish the right line of communication for flow of information.
  3. outlined the assumptions and factors used in preparing the forecast
  4. Prepare, discuss and monitor the prepared cashflow forecast.
  5. adjust and amend as the situations become clearer.

1. Identification of outflows and inflows of cash in the business.

We need to know what are the outflows and inflows of cash into the business.

For inflows, the obvious item is the revenue of the business, then in the course of business, we may secure some financing. both these two are the inflows of cash into the business.

Besides the above mentioned two, sometimes, shareholders may decide to increase the capital of the business, this will be another item as inflow.

As for outflow, we have to decide which are variable and which are fixed items.

For fixed item, it can be the rental paid for premises, and leasing of equipment which have fixed rental rate.

I like to categorize the outflow into operating, financial and capital in nature.

in terms of operating, we are talking about fixed overhead and variable overhead.

you can also classify into direct and indirect payment, just to make it clearer and easier to understand the natures of outflows.

Direct payments can be expenses such as utility expenses, salaries for the staffs.

2. Establish the right line of communication for flow of information.

In preparing the cashflow forecast, it is important that we have the right line of communication for flow of information.

If we want to have an accurate forecast on cashflow, it is important that the operation side know what information to furnish to finance staffs, so that they can use the right data to prepare the forecast.

Finance staff must also know who to look ask for information, the right data, same with other department like marketing and customer services.

3. outlined the assumptions and factors used in preparing the forecast

In preparing the forecast, we have to make sure we have the assumptions correctly spelt out, and the factors used.

Without showing the assumptions, readers and users will not know what are the basis and how the forecasts are prepared.

4. Prepare, discuss and monitor the prepared cashflow forecast.

a cashflow forecast prepared and just left it on the shelf will not serve any purpose.

the management staffs need to monitor and discuss the forecast every now and then, to see how much is the deviation of the actual from the forecast.

5. adjust and amend as and when the situation become clearer.

if the management of the business is able to monitor the forecast regularly.

they will be able to see the deviation of the actual from the forecast and if need be, make the necessary adjustment, so that the forecast is more reasonable and sensible.

We can also use the cashflow forecast as a tool to make business operation better and more efficient.

from the cashflow forecast and in the weekly review of the forecast, we can see whether we are not doing as good in our debt collections, if that is the case, then we can take the necessary action, may be to beef up the debt collections process, find out why the customers are not paying.

If we pay more than  as forecast, we have to find out the reason.

By doing so, we can improve our business process and operation efficiency.

Getting the real cash position to match the forecasted figures, require a high discipline from every one in the business, thus, the importance of timely review and analysis between the actual and forecast.

Most companies are not able to survive a short term cash flow shortage, if no forecast is available, business will not know where it goes wrong, not to mention to take the remedial actions.

Cash flow forecasting is tedious and arduous,  bear in mind, it is also a very important tool.

This critical process will let you know how much cash your business can generate, it can also enable you to know what you need to fund future expansion and working capital.

While your forecasts will never be 100% accurate, by preparing it frequently, you will develop an uncanny ability to make a more accurate forecast if you can devote the proper resources to cash flow forecasting sooner rather than later.

In my next article, I will talk more about how we can make use of this business tool more effectively.

If you want to learn more about cashflow, you may want to go HERE

How To Manage Cash Flow Effectively – Part I

Cash Flow, a term every business man is familiar with, it is also a term a lot of business man misunderstand.

So what is a cash flow?

Cash flow, to a finance guy, is the most important thing in a business.

However, if you go and tell the boss this, he will disagree, he will tell you sales is the most thing in a business.

if cash flow breaks down, definitely the business will break down.

People may argue without sales, you don’t have money coming into the business.

However people tend to forget when you start a business, you need capital, that is cash flow!!!!.

In a nutshell, cashflow is the amount of cash that is moving in and out of your business cycle at a certain period.

Positive and Negative Cashflows

If you have more cash flowing into your business than out of your business, then you have a positive cashflow.

That means you do not have to worry about meeting your payments requirement and settling your expenses especially the salaries of the employees.

On the other hand, if your cash flow position shows a negative cashflow, perhaps it may give you some worrying signs.

Negative cashflow may indicate your inability to meet your financial obligation, you may also have difficulty in paying for your expenses, worse still, you may not able to purchase goods to sell.

Thus, the importance of having enough money to meet all the business obligations is also knows as Working Capital.

What is the different between Sales and Cashflow?

Earlier I mentioned about sales and cashflow, and people think these two items are the same and one.

Actually the two terms are quite different, though these two terms go hand in hand and related closely.

Without sales, after the initial start up capital, there is no inflow of money to the business and this will create a big problem for the business to operate smoothly.

Hence, sales to certain extent is an indication how much money will be coming into the business.

What about Profit and Cashflow?

quite a few people like to think profit is equivalent to cashflow.

You can hear people ask a question – the company has so much profit, but why isn’t there money in the business at all?

Some are puzzled the business has so much profit but having difficulty to fulfil its financial obligation.

A good credit analyst will do the followings:

  • look at the profit and loss account of a business,
  • he will also look at the changes in the financial position of the business.

By looking at the changes in financial position of a business, it is easier

  • to determine whether the business has healthy and
  • positive cashflow, or whether
  • the business is facing acute cashflow deficit despite being very profitable.

Therefore, the management must learn how to read the statement of changes in financial position.

Importance of understanding changes in financial position.

This is to enable them

  • to grasp a better idea and take hold of the situation.
  • By doing so, at least the management has a rough idea
  • of what is the position of the liquidity of the business, and if need be,
  • take some actions to strengthen the cashflow of the company.

Why does cashflow matters and important?

Just imagine, if you do not have the cash in hand, a lot of things in the business will come to a standstill.

You may not be able to pay the salary of your employees, this will badly affect the morale of the staffs.

When suppliers hear you have cashflow problem, the first thing they do is to cut the supply and this will affect the operation of the business.

Worse, if the suppliers decide to take drastic action to recover the amounts the business owed to them.

This will definitely

  • damage the reputation of the business
  • when suppliers file for action to wind up the business or
  • put it under judicial management.

Managing cashflow and learning how to do it effectively, is a fundamental process.

A process which eventually will lead you to grow your business in a more profitable and sustainable way.

Once one has learnt and finally know the inside out of cashflow management, it is then the time to start looking at growth of the businesses.

Next I will be talking about How To Manage Cashflow Effectively in my next article.

Learn to manage cashflow