When Markets Move, What Should Your Cash Actually Be Doing

What's going on

Every few months, markets do something alarming. Equities sell off. Rates tick up or down. And founders who've been too busy running their business suddenly look at their bank balance and wonder if they're doing something wrong.

Most aren't. But most also haven't thought clearly about what their operating cash is actually for — and that gap gets expensive when conditions shift.

This is a structural question, not a one-week problem. The answer doesn't change with every rate decision. But most Singapore SME operators have never separated their cash into buckets with different jobs. They have one account, one balance, and a vague sense that "more is better."

More is not always better. Idle cash above your buffer has an opportunity cost. Cash parked in the wrong place can get locked up exactly when you need it. Both of those matter more when conditions are moving fast.

What it means for your business

Take a marketing agency turning over SGD 2.2M a year. Monthly operating costs — salaries, tools, rent, contractor fees — sit around SGD 140K. Clients take 45 days on average to pay. That means they need roughly SGD 200–250K liquid at all times to avoid a crunch if two clients pay late at the same time.

That's the floor. Call it the operational reserve. It belongs in an account where you can move funds same-day — a business current account or savings product. Yield matters less than access.

Now say they have SGD 500K in the bank. The SGD 250K above that floor has a different job. It isn't needed tomorrow. It probably isn't needed next month. That's where the question gets interesting.

Some founders park it all in the same current account because they haven't thought about it. They're leaving something on the table. Others, seeing rates move or markets dip, start getting creative — buying things they don't fully understand, or chasing yield in products with 90-day lock-ups. Now their buffer is locked up exactly when they might need it.

The framework that works is simple: three buckets, three jobs.

Bucket one — 60 to 90 days of operating expenses. Liquid. No lock-up. This is your operational reserve.

Bucket two — surplus you won't need for six to twelve months. Here you can consider short-duration options:

• T-bills — short-term Singapore government debt. You lend money to the government for 6 or 12 months, they pay you a fixed yield at the end. Low risk, fixed return, you know exactly when you get your money back.
• Fixed deposits — same idea via your bank. Lock cash for a set period in exchange for a higher rate than your current account.
• Money market funds — pooled funds holding short-dated, low-risk debt. Slightly more flexible than fixed deposits.

Pick based on your actual timeline, not the current yield headline.

Bucket three — anything beyond that. That's a strategic question, not a cash management question. Most SMEs at SGD 1–3M revenue don't have a bucket three yet, and that's fine.

What to do this week

First, pull your last three months of bank statements. Add up your average monthly outgoings — payroll, rent, fixed vendor payments, tax obligations. Multiply by two. That's your minimum liquidity floor. Verify you're holding at least that in an account you can access immediately.

Second, look at everything above that floor. Write down where it sits, what the lock-up is, and when you'd actually need it. If you can't answer the last question, your money is in the wrong place.

None of this requires a finance team. Ninety minutes and a spreadsheet you probably already have.