Where to Park Operating Cash When Rates Are in Flux

What's going on

Most Singapore SME founders have one default move with operating cash: it sits in a DBS or OCBC current account, earns close to nothing, and gets touched only when payroll or a supplier invoice hits.

That habit made sense when rates were near zero and the spread between a current account and anything else was barely worth the paperwork. That world is gone.

Rate environments shift. T-bill yields move. High-yield deposit products get repriced. Banks adjust their promotional savings tiers. What does not change is the underlying question every founder running a SGD 1–3M business should be asking regularly: is idle operating cash working as hard as it safely can, without putting liquidity at risk?

This is not a trading question. It is a cash management question. There is a difference, and conflating the two is how founders either leave money on the table or accidentally lock up cash they need next Tuesday.

What it means for your business

Say you run a mid-sized recruitment agency in Singapore. Monthly revenue around SGD 180,000, gross margin at roughly 35%. Your cost base is predictable — salaries, CPF, a small office lease. You collect 30-day invoices from corporate clients who mostly pay on time.

At any given moment, you are probably holding SGD 150,000–250,000 in your operating account as a buffer. Call it two months of fixed costs. Sensible. That cash is doing nothing.

Here is the structural question: how much of that buffer actually needs to be in an instant-access current account versus something that earns yield on a short lag?

If your payroll runs on the 25th and your key supplier invoices settle on the 10th, you have a relatively legible cash cycle. You do not need the full SGD 250,000 liquid at all times. A tiered approach works:

• Tier 1 — operational float. SGD 80,000–100,000 in a current or high-yield savings account. Instant access. This covers surprises and timing gaps.
• Tier 2 — near-term reserve. SGD 80,000 in a short-duration instrument — a six-month T-bill, a fixed deposit rolling monthly, or a money market fund with T+1 liquidity. Earns something. Accessible with a week's notice.
• Tier 3 — medium buffer. Anything beyond that sits in a longer fixed deposit or a second T-bill tranche, rolled on a schedule that matches your quieter cash periods.

The yield difference between Tier 1 and Tier 2 at most points in the current rate environment is not trivial over twelve months on SGD 80,000. It is real money that compounds into your bottom line without changing your risk profile at all.

The mistake is treating this as a one-time decision. Rates move. Your cash cycle shifts when a big client pays late or you hire ahead of a busy quarter. The placement structure needs a review cadence, not a set-and-forget.

What to do this week

First, pull your last three months of bank statements and find your average end-of-month balance across all accounts. That number is your baseline. If it is consistently above one month of fixed operating costs, you almost certainly have idle cash that can be tiered.

Second, open your cash flow model — or build a simple one in a spreadsheet if you do not have one — and map your fixed payment dates for the next ninety days. Payroll, CPF, rent, standing supplier payments. Where are the gaps? Those gaps tell you how long you can safely commit cash without touching it.

Third, ask your banker or check MAS Auctions directly for current T-bill tenor options. Compare that against your bank's fixed deposit rates for one and three-month terms. The paperwork for a T-bill is not complicated. If you have never done one, your corporate internet banking almost certainly supports it.

You are not trying to beat the market. You are trying to stop subsidising your bank's balance sheet with your working capital.