For The Modern Singaporean Investor: Is Your Business Portfolio Leaking Cash Overseas?

As an investor, you meticulously track the expense ratios on your funds and the yield on your bonds. But what’s the ‘yield drag’ on the biggest asset in your portfolio—your business? For many Singaporean business owners, a silent cash leak in overseas operations is costing them more than any fund manager’s fee. This hidden inefficiency erodes profits and stifles international growth potential.

Diagnosing the ‘yield drag’ in your business portfolio

Traditional international payments can act as a significant performance drag on your business assets. While cross-border flows represent only one-sixth of total transaction values, international payments generate up to SGD$200 billion globally in revenue, split roughly evenly between transaction fees and foreign exchange (FX) revenues.

This equates to 27 per cent of global transaction revenues and is increasing by 6 per cent annually.  This isn’t a simple ‘cost of doing business’; it’s a direct reduction in your business’s annual return. A business generating  SGD$1 million in international revenue could be losing up to  SGD$60,000 a year to this inefficiency—capital that could be reinvested for growth.

Rebalancing your portfolio’s financial plumbing’

Smart investors diversify. This principle should also apply to your business’s finances. By incorporating a specialised platform to pay global business partners, you are essentially ‘rebalancing’ your operational portfolio away from high-cost, low-efficiency assets in traditional banking towards high-performance, low-cost alternatives technology. Such platforms offer the ability to make payments in more than 40 currencies, providing greater flexibility and cost control. The goal is to plug those “cash leaks” by moving from a single-provider dependency to a more diversified, efficient model using modern financial technologies.

A simple ‘alpha’ strategy: the before/after ROI

This operational optimisation is not just about monthly savings; it’s about actively generating ‘alpha’ for your business asset. Businesses with optimised financial operations and higher profit margins can command valuations that are 15-20% higher upon exit compared to their less efficient peers. While high gross margins are desirable, they must be considered alongside customer retention rates. A simple comparison demonstrates the return on investment of making this change:

Before Optimisation: A business with  SGD$1 million in international revenue faces a 3-6% operational expense ratio on payments, equating to a  SGD$30,000 to  SGD$60,000 annual yield drag.

After Optimisation: By shifting to a high-performance FinTech platform, the business reduces its operational expense ratio to under 1%, cutting the annual drag to less than  SGD$10,000.

ROI: This creates an additional  SGD$20,000 to  SGD$50,000 in annual net profit, which, when capitalised at an industry multiple, can add significant value to the business’s eventual exit valuation.

Wrap-up

Treat your business with the same financial discipline you apply to your stock portfolio. By optimising its financial operations, you’re not just saving money—you’re actively generating alpha. Plugging these cash leaks is a proactive investment strategy that increases the annual return and long-term valuation of a key asset in your portfolio.