DCFO Special Feature

The Key to Employee Satisfaction: A Better Salary or Flexible Benefits?

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6 January 2023

Clarence Zhang, Co-founder and Country Manager for Malaysia Mednefits

Employees are always motivated to stay in companies that best fit their career goals and offer the best employment packages. But between employee benefits and salary, which one brings more satisfaction to employees? To find out more about this as well as the key differences between how employees perceive the two, DigitalCFO Asia spoke with Clarence Zhang, Co-founder and Country Manager for Malaysia Mednefits  to get his insights on the topic. 

Global Shift In Medical Priorities For Employees In 2022

In 2022, the talent market continues to be challenged by the enduring after effects of the COVID-19 pandemic and rising healthcare costs that outpace inflation. According to the 2022 Employee Benefits Trend Report published by Mednefits, medical benefits are seen as an additional cost by 3 out of every 10 businesses. At the same time, we see an increasing proportion of SMEs view benefits as a way to generate greater employee engagement, and are starting to pivot away from just seeing benefits as a mere means of medical coverage policies. 

In 2022, we all know of The Great Resignation phenomenon where companies struggle to retain employees and attract new talents. Topics surrounding employee benefits, engagement and general welfare began to surface and became the mainstay in discussions between HR personnels and bosses. 

“There has also been a significant shift in employees’ needs, with a preference for non-medical needs on top of just basic hospitalisation and GP coverage,” says Clarence Zhang, Co-founder and Country Manager for Malaysia Mednefits. 

This alludes to the inherent limitation of the traditional benefits model which is evidently unable to keep up with the changing demands of today’s workforce. 

Salary Increments In 2023

“With the current economic outlook being highly uncertain, and many speculations of an upcoming worldwide recession, there has undoubtedly been a correction of talent flow within the labour market,” says Clarence Zhang, Co-founder and Country Manager for Malaysia Mednefits.

Salary increment is highly dependent on the job market performance, which will differ for each company in different industries, in the respective countries. Companies might find themselves considering other forms of compensation other than salary increments, such as an increase in the benefits package for employees. 

After all, flexible benefits are gains or profits, which could be monetary or non-monetary (but largely monetary), that an employee benefits from during employment. Therefore, this posits that there are still a lot of creative ways that a company can engage in to show that they genuinely care and wish to take care of their employees. 

If employees were to acknowledge and consider the increase in benefits as an aggregated increase in their monthly compensation, then it is likely that we will see salary increments rise to pre-pandemic levels in 2023 in well-performing industries because they will be finding all ways to attract and retain the best talents out there amidst a labour market that is experiencing a correction.  

Flexible Benefit Programmes To Retain Employees In The Long Run

There is an increase in demand by corporations for onsite events, as we’ve seen spending increase by 2 folds within the last 6 months. The proportion of SMEs viewing flexible benefits as a way to generate greater employee engagement is 49%, which is not very far off from the 60% we see in MNCs. 

Examples of such events or programmes include Health Screening, Optical Screening, Yoga programmes, Group Fitness Classes, and Health Talks (Topics range from within the Traditional Chinese Medicine realm, to Specialist education to better manage chronic diseases). For companies with a younger workforce demographic, we see financial literacy talks, breathing seminars, and mental wellness workshops being conducted as well. 

However, in order to better retain employees in the long run, companies need to consider more than just wellness-related onsite events and programmes. A flexible benefits package for employees should always be dynamic simply because the needs of employees differ based on age, lifestyle, lifecycle, job scope, etc. As such, corporate wellness programmes should only at best be considered as a cherry on top of the cake if the company has extra budget.

 Individualised Benefits In Improving A Company’s Financial Health

“The idea of providing individualised benefits to employees means that the benefits package is largely personalised for the employee to best suit his needs, which increases the benefits relevancy to him,” says Clarence Zhang, Co-founder and Country Manager for Malaysia Mednefits. 

Although this leads to an outcome that is seemingly contrary to what employers want – employees end up utilising more of their benefits and costing the company even more, what is happening here is the promotion of shared responsibility of a budget between employee and employer. This essentially shifts the control of budget from employer ONLY to employee AND employer. 

Shared responsibility is an ideal state, and clearly a superior solution for companies that deem MC abuse as a detriment to the company’s financial health. In the long run, the company will get employees who fall sick less often, are more proactively using the company’s allocated budget fully and become more productive and happy at work. This would translate to increased output for the company and is ultimately the most sustainable way to improve the company’s financial health. 

SMEs: Leveraging On Data To Increase Profits

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Fatihah Ramzi, DigitalCFO Asia | 13 December 2022

Koren Wines, Asia Managing Director for Global Small Business Platform Xero.

Many small and medium-sized businesses have yet to comprehensively employ data analytics within their organizations, but they can begin with small steps by adapting what’s already in place. Data analysis offers a wealth of options for improving business decisions of all kinds, strategy, production, operations, and marketing. Unfortunately, it’s the very companies that are slow to adopt technology that may benefit the most.  

To understand more about leveraging on data to grow one’s business, DigitalCFO Asia spoke with Koren Wines, Asia Managing Director for Global Small Business Platform Xero, on how SMEs can unlock the full potential of their data to obtain data-driven wisdom to better guide business outcomes 

Reasons Why Organizations Are Being Held Back From Wanting To Use Their Data Successfully

It is not about want. It’s about all kinds of other things that are going on for small businesses. Small businesses are run incredibly lean, and they spend all their time running the business. Many small businesses know that they need to do things differently and that they need to digitize. They also know that they don’t have all the information at their fingertips as they are so busy running their business that they just don’t have time to put the energy into working out how to get data automated and seamlessly integrated so it’s delivering insights for them. 

When you start a business, you don’t know what you don’t know. Koren Wines shares that she actually comes from a business background and has owned her own business. One of the businesses she owned was a restaurant and when she started that business, she claims that she was not at all digitally digitally savvy. She didn’t understand how apps work together and software came together to deliver insights. 

She started that business because her husband had a hospitality background and was super excited to start his own restaurant. However, they soon started to realize that you know all the processes they had in place were not bringing out valuable insights. They did have accounting software and an electronic point of sale system, but those did not integrate. They were aware that they weren’t getting the insights that they needed out of their processes in order to make the decisions that they needed to make. 

But the problem was, you start a business and you’re running at a rate of knots – as mentioned before, small businesses are lean, so they do not have the time to stop and implement systems on their own.  For small business owners, the priority is to keep their business going. 

“So, I don’t think it’s about a want. We knew that there were there was amazing opportunity to digitise and optimize and you know and become more efficient. But we just didn’t have the people the time or you know, or the knowledge to be able to do it,” says Koren Wines, Asia Managing Director for Global Small Business Platform Xero.  

Impact on SMEs in the Financial Services Sector

Industry 4.0 refers to the adoption of new information technologies that allow massive amounts of data to be digitally collected, analyzed, and exploited in businesses to make better decisions. As a result, determining how businesses may use data components to improve their performance has emerged as an important research topic. This issue is becoming increasingly important for SMEs. 

It has been discovered that data adoption can have an impact on both operational and economic performance. Because of shifting client expectations and greater competition from Fintech competitors, the financial services sector simply cannot afford to leave data unexploited. Instead, SMEs should maximize consumer understanding and establish a competitive advantage by leveraging existing (and new) data sets. Several industry participants are already utilizing data analytics approaches to create compelling use cases, but many organizations are still lagging behind due to their preference for more short-term solutions. 

Case Studies Whereby Organizations Were Able To Increase Their Profits Simply From Leveraging On Data

  1. Panamericana 

F&B was hit hard during the pandemic, forcing healthy and bakery Panamerica to pivot to online delivery. It also became increasingly important for them to allocate and manage costs more efficiently. Panamericana reconciles transactions easily with the adoption of software that provides real-time bank feeds and reconciliation, allowing the business to do away with previously laborious manual processes, such as painstakingly updating Excel sheets. 

At the same time, stakeholders can access live data online via a smartphone, and generate financial reports quickly. This helps the restaurant allocate and manage costs more efficiently and allows companies to compete better in an economic environment that is constantly changing in response to evolving technology. 

  1. SGfitfam 

Fitness studio and wellness consultancy, SGfitfam, has saved an estimated 10 man-hours weekly on tracking and reporting financial data which has allowed them to focus on client wellness and developing new offerings. The “budget manager” tool was a particularly useful tool, to keep track of expenses and in setting up monthly budgets. The cloud-based accounting platform also allowed the team the visibility of monthly revenue goals and ensured that their finances stayed on track.  

Recommendations On Getting Started In Using Data to Make Informed Decisions

First and foremost, get help, business owners should find someone who knows their business inside out. Usually, the people that know the business better than the business owners are the accountants. This is because they know the financials of the business, and this is an amazing opportunity for accountants to move from just giving financial data to the business to speaking about those insights. 

Once a business’ data is moving, that’s when businesses owners want the help as they want to be able to make decisions about their business. Business owners simply want to be able to make decisions about their business, have the data interconnected, flowing seamlessly between the apps and then to be able to extract that to give them visibility. This visibility will allow businesses to understand whether they could make decisions in recruiting more people, whether they should grow, whether they should purchase equipment or whether they could expand into new markets. 

“Those are really critical decision-making things, and it is so lonely and isolating, you know, being in a business on your own, you feel like if you don’t have the data, you feel like you’re making decisions in a vacuum, and so you just need somebody to come and help you to get the data all lined up,” says Koren Wines, Asia Managing Director for Global Small Business Platform Xero. 

With that new visibility to be able to analyse and assess data to then give insights into the direction that businesses should go, getting help from an experienced accountant, is the very first businesses must do to get started on using data to make informed decisions. 

End Of Year Employee Wellness Program

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Fatihah Ramzi, DigitalCFO Asia | 29 November 2022

As the year draws to a close, it is critical that companies spend the time educating staff members about how to prevent the spread of diseases and urge them to get the necessary shots.

As the year draws to a close, it is critical that companies spend the time educating staff members about how to prevent the spread of diseases and urge them to get a flu shot, the COVID-19 vaccination, and booster dose in order to be prepared for the new year. With vaccines and flu shots, the company may see a decrease in employee absence, which eventually boosts productivity rates as fewer employees end up needing to take extended leaves of absence.

Employers have a responsibility to do their share to stop the transmission of disease in light of the ongoing COVID-19 pandemic and the upcoming flu season. In addition to wanting a healthy workforce, employers must continue to ease the burden on the healthcare system. Because of this, a focus on employees’ health would be one of the most important employee wellness initiatives that businesses could provide.

Employers should motivate staff to finish preventative checks. When it comes to leading a healthy life, prevention is essential because early identification frequently results in effective treatment. Many workers may have put off going to their primary care physician and getting routine care as a result of COVID-19. Encourage your staff to arrange for their yearly physicals, mammograms, colonoscopies, and other standard exams right away. A smart strategy to remain on top of general health issues and risks for chronic diseases like heart disease, stroke, and diabetes is to see your doctor once a year.

Encourage them to consider their wellness objectives for 2023. Employers should be sure to include their workplace wellness goals and strategies while developing their company strategy for 2023. To make sure that these objectives are accomplished, think about establishing a wellness committee within the company. The committee will be able to assess the team’s requirements and create a wellness plan that best meets those requirements. Your employees will have happier and healthier lives if you plan wellness challenges, encourage healthier eating, and offer resources. This will also increase employee happiness at work.

A wellness challenge can also be added by businesses during the holidays. It’s simple to get caught up in the Christmas rush and bustle, which can have a detrimental effect on our health. People frequently endure improper stress management and unhealthy or excessive eating, so it might be a good idea to advocate for exercise, healthy food, or stress reduction measures during this time. 

One approach to achieve this might be by creating a challenge that focuses on one of the aforementioned subjects. To ensure that the challenge is on everyone’s mind, let the employees know about it and keep promoting it throughout the season. Consider an incentive-based challenge with prizes connected to health and wellness to encourage the team and get them participating.

Make resources for mental health available. To raise awareness of mental health during the holidays, companies can consider hosting a seminar. Employees frequently forget about the resources at their disposal or are unaware of their coverage. If it’s feasible, think about doing a virtual yoga or meditation class to make sure that staff members are allocating time for their own self-care. Do not forget to inform, assist, and serve as a resource for the team.

Companies may also think about running a biometric screening program. As the end of the year approaches, many people frequently prefer to put their health on the back burner. Offering biometric assessments to employees either on-site or off-site can assist them in understanding their baseline health and any potential problem areas.  Biometric screenings can convey to your employees that you care about their health and welfare by serving as a reminder to not let the efforts toward better health slip up.

Promote a fundraising occasion or activity. Since it’s the season of giving, many workers may want to volunteer but find it difficult to find the time or are unsure of where to begin. Think about a charitable opportunity they might participate in to lessen this burden. Employees will gain an appreciation for the company’s principles and have the opportunity to volunteer together.

Overall, one of your company’s end-of-year focuses should be workplace wellness. The primary driver of both production and employee happiness will be their well-being. Giving them materials they can use in their daily lives is the best approach to give them the sense of value and appreciation they need.

Bridging Administrative Gaps In Singapore With HR Software

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Fatihah Ramzi, DigitalCFO Asia | 29 November 2022

Ben Thompson, CEO, KeyPay & Co-Founder, Employment Hero

The value propositions of applications for human resources are evolving. Leading firms are utilizing HR software to streamline and fully engage their workforces. Administrative tools to facilitate data collecting and allow employee self-service are becoming a standard.

Using HR software, managers may schedule people for work, keep track of their performance, and assist staff members in advancing in their careers and learning new skills. Reports on tax compliance, payroll and benefit expenses, and headcount analysis to forecast future costs are valued by the finance teams. And many individuals from other departments use information from HR systems to enhance the employee experience in leading firms.

KeyPay is an all in one Singapore payroll software made for accountants and payroll outsource providers. It automates the entire payroll journey and free up time to grow the company’s client base. To find out more about the benefits that a HR Software like KeyPay can offer, DigitalCFO Asia spoke with Ben Thompson, CEO, KeyPay & Co-Founder, Employment Hero.

The Vision For Employment Hero And KeyPay After The Acquisition

“Through my years of experience in employment law, I had a front row seat to the devastation caused by poorly managed employment in SMBs,” says Ben Thompson, CEO, KeyPay & Co-Founder, Employment Hero. To help address these issues, Dave Tong and Ben founded Employment Hero in 2014. The business has grown considerably over the years and whilst achieving “unicorn” valuation at $1.25 billion earlier this year, acquiring KeyPay was also a critical next step in their growth.

Payroll processing has always been a painfully manual task for accountants, bookkeepers, and payroll service providers. Australia ranks as having one of the top 5 most complicated payroll systems in the world, and so KeyPay was originally launched in Australia in 2012 with the mission to create a more accessible version of payroll by utilising the capacity of the cloud. 

Bringing the vision of automation to life, KeyPay streamlines the flow of data from employees across rosters, timesheets, leave management, and reporting, providing full client visibility of the pay run at all times in a single integrated platform. 

Since its launch, KeyPay has dramatically changed the payroll landscape by offering clients an all-in-one catering to the diverse business needs of businesses across Australia, the UK, New Zealand, Singapore, and Malaysia. 

“Looking ahead, we hope to further evolve Employment Hero and KeyPay to empower our partnership network with a complete suite of payroll and employment management tools, saving hours of manual effort, and opening the door to value-adding and people advisory services, and new revenue streams,” says Ben Thompson, CEO, KeyPay & Co-Founder, Employment Hero.

The Gaps In Singapore That KeyPay Can Close Or Minimise

Payroll processing is difficult across the globe, and each country has its own legislation complexities. A common issue faced by accountants, bookkeepers and payroll service providers in Singapore is leave management. Due to the different leave entitlements for employees, based on varying factors such as years of employment and individual agreements, manual payroll processing can be time consuming and prone to errors. 

This is not only detrimental for businesses, but can also lead to disputes from employees. Compliance is also an ongoing issue that has only grown in severity with the implementation of remote working and payroll processing across borders. On top of this, there are not many solution providers in the region that can effectively tackle these challenges. 

“With KeyPay, we hope to help mitigate these risks and help safeguard employees being paid incorrectly, as well as protect our partners and clients from compliance issues through effective automation,” says Ben Thompson, CEO, KeyPay & Co-Founder, Employment Hero.

The Uniqueness Of KeyPay

“KeyPay is built by payroll professionals, for payroll professionals, and is designed specifically with payroll service providers in mind,” says Ben Thompson, CEO, KeyPay & Co-Founder, Employment Hero.

KeyPay sets itself apart from competitors by being an all-in-one integrated payroll and workforce management platform that streamlines various processes for accountants and bookkeepers. What KeyPay’s partners love is not having to use multiple systems to provide payroll and people services. This reduces costs but also eliminates double handling of data. 

By embracing cloud technology and automation, the time savings allows their partners to invest more hours into nurturing their existing client relationships, take on more clients without adding additional headcount, and adhere to payroll compliance requirements more easily. KeyPay makes it possible for accounting and bookkeeping firms to expand revenue streams beyond just payroll and traditional accounting services.

Unique to KeyPay is its pay conditions engine. This allows users to build rules of custom employment agreements into the platform to automate unique pay conditions, overtime rates and entitlements, saving hours of manual calculations.

KeyPay provides a Bureau Dashboard that allows its partners to have a bird’s eye view of all the pay run activities in one location. Statuses such as “Error” and “Overdue” help its partners to prioritise the key tasks and make sure nothing critical goes unnoticed. Partners can also perform bulk actions, such as finalising pay runs. Beyond that, partners also have access to a partner dashboard which allows them to have a centralised location to manage business settings, such as business templates, and clients seamlessly. 

KeyPay In Allowing Employees To Spend More Time On Value-Added Work

Payroll is a very tedious and time-consuming process in a business that includes managing things like leave balances, deductions and tax calculations manually across various countries with personalised requirements for all individuals employed.

“We have seen that businesses are placing increased importance on their accountants to provide more advisory services, and less transactional work,” says Ben Thompson, CEO, KeyPay & Co-Founder, Employment Hero.

By automating payroll, service providers are able to take on new outsourced payroll clients while actually cutting down their workload. The time saved can be refocused on expanding their client base, or even moving into new markets, further increasing revenue.

For example, EPG Payroll & HR used KeyPay as their operational backbone to move into new markets and support clients with their international expansion. Empowered by KeyPay’s wide ranging capabilities and local compliance functionality across 5 different regions, EPG were able to streamline processes and expand their services globally.

Importance Of Investing In Trend Prediction

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Fatihah Ramzi, DigitalCFO Asia | 24 November 2022

With the help of trend predictions, businesses can save money by not investing in products that might not appeal to their target market and instead focus on developing goods and services that fulfill the needs and objectives of their consumers.

Business executives that embrace and uphold best practices for financial forecasting or trend prediction are better equipped to expand their businesses and handle unforeseen setbacks. Despite the fact that it is difficult to accurately forecast the future, as the COVID-19 pandemic has shown, the organization has a better chance of adapting if it can properly hedge against the worst-case situations.

The truth is that businesses don’t become well-capitalized, with solid balance sheets and positive cash flows by accident. Rationally analyzing data, being intimately connected with the business, and having the most recent customer and market insights are all essential to financial health. In prosperous times, finance teams that perform accurate forecasts benefit from the company’s success. According to data analytics, business executives are aware of how their finance teams’ careful planning helped them survive a very trying time.

Trend Prediction

By analyzing the past and the present, forecasting is the process of predicting what will happen in the future. Based on anticipated demand for products or services, it serves as a planning tool that enables organizations to respond to unpredictability.

A solid financial forecast or trend prediction includes both macroeconomic considerations and circumstances unique to the organization. Trend prediction is a financial plan that estimates the likelihood of certain disruptions occurring that could affect future income and expenses of a corporation. A comprehensive projection includes, but is not limited to, short- and long-term outlooks on variables that may have an impact on revenues and backup plans for expenses not now considered required.

Organizations that provide accurate financial trend predictions rely on model-building professionals, either employees or consultants, and combine their work with input from individuals who have a thorough grasp of the organization, the sectors it serves, and the communities it works in. Similarly, data collection and software are crucial to the financial forecasting process.

Importance Of Predicting Trends

Trend predictions are crucial for corporate planning, budgeting, operations, and funding; they merely assist executives and external stakeholders in making wiser decisions. A financial projection is an estimation of how much money a firm will make in the future, and it’s an essential step in creating the annual budget. It guides important financial choices like whether to fund a capital project, add employees, or attract investors. Business balance sheets and other disclosures provide significant information from their predictions.

Trend predictions give firms access to unified reports, enabling finance departments to set realistic and doable company goals. Additionally, it offers management important information about past and projected performance of the company. Financial predictions are crucial in investor relations and loan applications, in addition to guiding internal fiscal controls and choices. Predictions are taken into account in the decision-making processes of banks and other funders. Startups are also not exempt. As described, financial projections are a crucial component of any new business plan.

Benefits of Trend Prediction

Along with the previously mentioned practical advantages, creating a financial forecast compels finance teams and line-of-business associates to pause and consider the worth of rolling predictions.

CFOs must decide whether to employ a rolling model or project out a certain number of months. Will the projection be incremental, expanding on last year’s, or will the company start with a clean slate? Which potential new product lines need to be included in a formal prediction since facts supporting their viability exist?

With trend prediction, CFOs can confidently approve a new capital project based on data, make wise judgments even when under time pressure, and have better success securing finance or attracting investors.

Types of Trend Analysis

Numerical data are used to compute trend analysis. It usually consists of historical data, either conventional data (such as a company’s success as reported in its publicly available financial records) or alternative data (such as the number of job openings made by a rival in the previous five years). You may spot three different types of trends when you add numerical data to a chart.

Upward Trend

The company’s data points are growing, which is what an upward trend signifies. This could indicate different things depending on what kind of variable you’re looking at and what you’re trying to accomplish. For instance, if you are a business owner and are looking at the cost of the raw materials needed to make loaves, you see that the cost is rising. You may predict several outcomes using this knowledge, such as rising costs for your company or the requirement to increase ultimate consumer pricing.

At the same time, if a shareholder observes an upward tendency in the share price of a business, it could influence them to buy the company’s stock. An increase in a stock’s price typically denotes a positive situation, assisting you in deciding whether the investment would be wise.

Downward Trend

On the other hand, a downward trend shows that the value of your variable is declining. For instance, if a company’s earnings fall sharply, investors may need to exercise caution since the stock is hazardous because the price is falling. This is true if other economic or financial variables are trending downward. When researching financial assets, investors might perform trend analysis on the asset’s historical data. If the price is falling, a bearish market is present. In other words, investing is not advised in this situation because it could result in a loss if prices continue to fall.

Horizontal Trend

Finally, stagnation is indicated by the horizontal line. In other words, neither the prices nor any other measures are increasing nor decreasing; instead, they are remaining unchanged. In reality, a flat trend may rise for a time before pulling a trend reversal, attaining an overall steady general direction. It’s dangerous to base investment decisions on horizontal trends because you never know what will happen. If you do decide to go ahead with it, you must undertake a detailed income and expense analysis regarding the sales regions to determine the dangers.

With the help of trend predictions, businesses can save money by not investing in products that might not appeal to their target market and instead focus on developing goods and services that fulfill the needs and objectives of their consumers. By taking into consideration market demands, product popularity and improving their chances of producing something that their consumers will like, this can help organizations save time and money. This enables companies to capitalize on consumer preferences by spotting market possibilities as they materialize.

Unto The (Data) Breach – The Best Defense For SMEs & Startups

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Fatihah Ramzi, DigitalCFO Asia | 21 November 2022

Kevin Foo, Head of Cybersecurity at Exabytes

According to a survey conducted by the CyberRisk Alliance’s Business Intelligence Unit, about 2 out of 3 businesses in Singapore experienced at least 6 cyberattacks in 2021, with almost half of businesses not being able to respond within 24 hours. That delay in response is major too, as that delay caused these incidents to evolve into full on data breaches in almost 3 out of 4 cases.

As the world becomes more and more dependent on technology and information systems, cybersecurity has become critical for anyone to carry on with their daily lives. Despite that, most corporations are still clueless on how to manage cybersecurity, and are scrambling to prepare their defenses. Even big companies, such as Starbucks, Sembcorp Marine, and Samsung, are no longer safe from data breaches. And if these players, with their massive capital and resources, are having a hard time, what hope do small online businesses have?

To find out more about how SMEs’ can safeguard their data from cyber attacks, DigitalCFO Asia spoke with Kevin Foo, Head of Cybersecurity at Exabytes who believes that the best defense is to educate the public on cybersecurity and how to safely conduct business online. Hence, Exabytes wants to educate both its users and SEA as a whole on the dangers of cyberattacks, and what small startups, SMEs, and businesses can do to protect themselves.

Common Types Of Cybersecurity Threats That SMEs Encounter

SMEs commonly encounter cyber threats that hinder their ability to conduct business online, and can lead to severe disruptions of services. These types of cyber threats include:

  • Malware Attacks, where malicious software (i.e. including worms, spyware, adware, and trojans) is uploaded into your system.
  • Phishing attacks, wherein an attacker impersonates a contact and sends the victim fake mails to steal credentials, confidential information or trick victims to install malware.
  • Ransomware attacks, where a type of malicious software is used to encrypt the victim’s files or disables basic system functions. Threat actors will then extort ransom payments in exchange for encryption keys to decrypt files or restore system functions. 
  • Distributed Denial-of-Service (DDoS) attacks, where attackers target systems, servers, or networks, flooding them with volumetric traffic to exhaust their resources and bandwidth. When this happens, online servers get overwhelmed, resulting in the business website either shutting down or slowing down.

Strengthening An SME’s Cybersecurity With All-In-One Business Cloud

As enablers for online businesses, it is crucial that service providers like Exabytes understand the cybersecurity needs of both users and the broader startup/SME community to develop solutions that can assist them, especially in this more tech dependent age. Exabytes, as an All-in-one Business, Cloud, Digital and Ecommerce solutions provider, has experience with cybersecurity products such as:

  • Acronis Cyber Protect, 
  • Sucuri Website Security,
  • SSL Certificate,
  • SpamExperts

“We believe, with the right solutions and support, SMEs can be better protected against cyberattacks,” says Kevin Foo, Head of Cybersecurity at Exabytes.

It is essential that newer and smaller companies have the assurance to do their business online effectively and safely, without the threat of cyberattacks happening to them.

SMEs: Safeguarding Their Infrastructure & Continuity Of Operations With Minimized Threats

Regardless of market conditions, there are 2 important aspects of Cybersecurity that SMEs can look into to safeguard their infrastructure and ensure continuity of their business operations – human and technology.

Humans are always considered the weakest link in Cybersecurity. Considering that some cyberattacks hinge on social engineering, it is important to educate employees to create a risk-aware culture within the workplace and basic skills on Cybersecurity to protect themselves.

  • Conducting training sessions will ensure that employees use only approved software and do not click a link directly from the email.
  • Employees should not visit suspicious websites and always verify their legitimacy of a website by checking TLS certificate information.
  • Ensure VPN is used whenever accessing company infrastructure.

SMEs can better protect themselves by adopting security technologies.  Companies can enforce strong passwords with Multi-Factor Authentication (MFA) to further secure business accounts. On top of that, they should regularly update operating systems and applications, as that will eliminate vulnerabilities that hackers can exploit. 

Additionally, they should implement layered protections to software and systems, such as endpoint protection software, firewalls, Web Application Firewalls (WAFs), intrusion prevention systems (IPS), email protection, access control, application security, etc. Companies should also consider deploying a data backup and recovery strategy and regularly testing on restoration to ensure business operational resilience. Protect data in transit with the use of encryption such as Transport Layer Security (TLS).

The First Line Of Action For SMEs Who Are Facing Security Breaches

A security breach occurs whenever any unauthorized user circumvents security control measures to access restricted systems or data. 

“No one is spared from a security breach, no matter how strong your defenses are,” says Kevin Foo, Head of Cybersecurity at Exabytes.

Thus, it is important to learn how to handle security breaches. Below are just simple steps for reference:-

  1. Keep Calm

It is stressful handling security breaches, as there are stakeholders to be managed, and may potentially lead to financial losses for the company as a whole. Nonetheless, the incident should be managed in a calm and professional manner. Panicking will only make the situation worse.

  1. Identify what was breached and eliminate threats

When did the security breach happen? How did the threat actor get into the system? Was it financial data? Was it customer data?

These are some questions SMEs should ask after a security breach. It is essential to assess which system or data was breached. Systems should be secured or taken offline to prevent further security breaches. Remote access should be restricted and credentials should be changed. 

  1. Keep information transparent

When a security breach happens, SMEs should not keep the breach a secret. Instead, it is critical to provide transparency on the breach. If notification to authority is required, SMEs should provide all the relevant information. Ideally, they should also create a team to handle the incident. This may involve lawyers, members of their human resources team, members of their communications department, as well as the SME’s management team.

  1. Get expert’s help or follow incident response plan

Typically, SMEs and startups have fewer resources and less sufficient technical expertise in handling security breaches. Thus, it is a good idea to seek external expert help (i.e. an Incident Response service) for proper incident handling. If an SME has an incident response plan, it is the time to put it into practice and update the plan accordingly as it will be a guide in the future.

  1. Enhance security controls

Restore the service with the vulnerability fixed, and work to continuously improve security controls or add layers of defense to better protect the system and data. This can further minimize the cyber threats.

APAC’s New Distributed Workforce Economy

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Fatihah Ramzi, DigitalCFO Asia | 14 November 2022

Pedro Barros, VP of Finance at Remote

The advantages and disadvantages of remote work were already being discussed before COVID-19. Although some businesses had already created their organizations with purely remote work in mind, many others remained wary. When the COVID-19 pandemic struck, organizations that had not previously permitted flexible working arrangements were forced to quickly put up their remote working infrastructure, both technologically and culturally, in order to maintain operations.

Companies should build upon this new standard rather than revert to their antiquated ways since so much rigor and work went into refining remote working during that time. In many ways, businesses must accept this new standard because failing to do so will probably result in them losing their employees to other companies.

Remote is a company that believes in global talent employment and seeks to unveil the world of remote work for every person, business, and country. With over 900 internal employees, their entire team works remotely in their chosen locations around the world; passionate about what a game-changer it has been.

To find out more about remote work, DigitalCFO Asia spoke with Pedro Barros, VP of Finance at Remote.

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2022 Workforce Challenges In APAC

The ‘forced remote’ of the pandemic is now giving way to a permanent shift to flexible, remote work. Some companies are already there, but the transition could be challenging for some companies to navigate. The change is being driven in part by employees who have higher expectations for independence and flexibility. In Remote’s newest Global Benefits Report, people ranked flexibility as one of their most important employment benefits – and workers who are already remote actually ranked flexibility as more important than compensation. 

However, it is also being driven by companies that have discovered that remote work offers significant competitive advantages. They can tap into a much wider talent pool, especially for hard-to-fill roles. They can build a more diverse and inclusive workforce. They can achieve global coverage in servicing clients. All of these factors mean that remote work is becoming more than just a convenience. It is a way for innovative companies to attract and retain talent, and compete and win on a global level. Those who are unable to evolve as quickly as their competitors could end up being left behind. 

The Possibility of A One-type-fits-all Approach To Hybrid Work

“With the right approach, there’s an opportunity for any department to work effectively in a remote setting,” says Pedro Barros, VP of Finance at Remote.

This can be in hybrid or entirely remote models. Remote, has no physical offices, so their finance team is fully remote and distributed across multiple continents. In order to succeed as a remote team, especially one that is global, businesses need to view remote work not as an exception to the norm of daily working life, but instead think “remote-first.” 

To be remote-first means treating remote work, and the needs of remote workers, as the default way of working. Transparency, documentation, communication, and trust are all critical so that everyone is equally empowered to do their best. This does not mean that everyone has to be remote and no one can work in an office. It simply means that everyone learns to communicate in a way that makes it equally easy for co-located and remote employees to do their best work.

Obstacles In Hiring Remotely

Hiring and working remotely means that teams can become more distributed geographically, including across international borders. 

“It is no longer necessary for your entire team to live in the same city or even the same country or continent,” says Pedro Barros, VP of Finance at Remote.

The biggest obstacles that are preventing this from being more common are the practical challenges involved with employing someone who lives in a different country – how to pay them, how to provide benefits, and how to manage taxes and compliance. Each of these things can involve expensive, time-consuming processes. That’s why most companies choose to hire only in their own country, even for fully remote roles.

Remote was created to help companies solve this problem. The company serves as an employer of record so that its customers can legally hire full-time employees in more than 65 countries, and give them an easy way to hire, onboard, pay, and offer benefits and stock options no matter where their teams are located. 

The Productivity Rate Of Remote Employees

In Microsoft’s Hybrid Work Report, 80% of employees say they are just as or more productive since going remote or hybrid. Flexible work policies generally lead to positive effects on productivity, and they also have other benefits like allowing employees to prioritize their families, health, and wellbeing. 

“For remote roles, it may be necessary to rethink how productivity is measured,” says Pedro Barros, VP of Finance at Remote.

An unfortunate growing trend in remote work is the practice of monitoring employees to ensure they’re working on their assigned projects at particular times, and tracking how many hours they work in a day. This is completely unnecessary. In many cases, it doesn’t matter how much time someone spends in front of their computer or what time of day they’re completing their assigned work. What is important is that an employee’s output is what you expect from someone in their role. 

Challenges In Hiring Remote Finance Professionals

Similar to recruiting talent in other sectors, the challenges with hiring remote finance professionals comes from the competition for top talent. As remote work creates access to a wider pool of world-class finance professionals, companies must also remember that they are competing for the same talent on a global scale alongside the most successful multinational companies. 

One way to stand out beyond pay and flexible work policies is with employee benefits. In Remote’s recent report, 60% of employees say they have chosen one job over another because it offered a better benefits package. For global remote roles, that means offering localized benefits that are tailored to their specific needs.

Maintaining Employee Well-Being Through Virtual Means

Employee well-being and belonging are part of the foundation of great workplace culture, whether that culture is remote or not. Employers play a large role in the lives of their employees, especially their mental health, so creating a culture of acceptance and trust helps to support people to do their best work. There are a number of ways that a company can support their remote employees’ well-being, including letting people take time off when needed, providing resources and training, and implementing a flexible, asynchronous work schedule. 

The Race Against Time To Outsmart Cybercriminals

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Fatihah Ramzi, DigitalCFO Asia | 10 November 2022

Businesses are in an ongoing race with cybercriminals and many are finding it difficult to keep up.

Nation-state organizations and cybercriminal gangs, whose operational components increasingly mimic those of for-profit businesses, are part of the present danger scenario. The existing danger scenario is likely to persist into the near future, if not forevermore, thanks to professional hackers, syndicates, businesses, and nation-states.

“Lapsus$” is one such organization that demonstrated the extent of the harm a very inexperienced attacker can cause by purchasing stolen credentials and indiscriminately spamming MFA prompts. Even actors at the level of wealthy nation-states frequently use freely accessible open-source and commercial tools as part of their operations. After all, why create anything from scratch when an established tool already exists, plus there’s the added benefit of avoiding detection by using the same tools and procedures as standard cybercrime syndicates.

“Lapsus$” has the potential to do serious harm to large companies such as Samsung, Microsoft and even government bodies. The amount of money that cybercrime syndicates routinely extort from their victims has significantly increased over the past few years.

As a result, every organization that is simple to break into becomes the target of attacks from new syndicates and persons with hacking skills. Particularly in regions of the world where criminal penalties are unlikely to be applied, the incentives (of hacking) are simply too compelling.

Therefore, these are some of the key elements that businesses will want if they wish to keep ahead of such well-organized cybercrimes:

1. Securing Network Access

All the measures taken to safeguard a computer network’s integrity and the data on it are collectively referred to as network security. Network security is crucial because it protects sensitive data from online threats and guarantees the network’s dependability. Multiple security measures are used in successful network security plans to shield users and companies from malware and online threats like distributed denial of service.

Network security is important because it keeps hackers from accessing sensitive data and valuable data. When hackers gain access to this data, they may cause a number of issues, such as asset theft, identity theft, and reputational damage.

  • Access control. This approach restricts a certain set of users and devices’ access to network systems and apps. These solutions prevent unauthorized people and devices from accessing the network.
  • Data loss prevention (DLP). To identify and stop data breaches, these tools keep an eye on data when it is in use, in motion, and at rest. DLP frequently categorizes the most crucial and vulnerable data and instructs staff on best methods for protecting that data. One such recommended approach is to avoid including sensitive items as attachments in emails.
  • Firewall. To stop unwanted network access, software or firmware will examine every incoming and outgoing traffic. One of the most popular security tools is the firewall. They are spread out around the network in various locations. With integrated deep packet inspection, next-generation firewalls provide improved security against application-layer attacks and sophisticated malware protection.

2. Plugging Internal Threats

Any person within an organization who has access to sensitive information and IT systems that could harm the company is considered an insider threat. Policies, processes, and technology that help prevent privileged misuse or lessen the harm it can do can be used to mitigate insider risks. Companies  may reduce the likelihood of their sensitive data being compromised by using these insider threat prevention practices:

  • Carry out an overall risk analysis for the company. Know your most important assets, their weaknesses, and the potential threats to them. Include all of the hazards brought on by insider threats. Then, in accordance with the risk priority, focus on the key risks and continuously improve your IT security infrastructure.
  • Policies and controls should be well-documented and regularly followed. Each piece of security software, including appliances, needs its own administrative policy and configuration documentation. Create policies concerning practically every employee interaction with the IT environment by working diligently with HR.
  • All endpoints, including mobile ones, are under the supervision and control of remote access. Install and correctly install mobile data interception equipment as well as wireless intrusion detection and prevention systems. Regularly assess if employees still need a mobile device or remote access. Make sure that all remote access is turned off when a worker departs the company.

3. Vulnerability Management 

The continual, routine process of discovering, analyzing, reporting on, managing, and resolving cyber vulnerabilities across endpoints, workflows, and systems is known as vulnerability management. A security team often uses a vulnerability management technology to find vulnerabilities and then applies various patching or remediation procedures to close them.

A vulnerability manager’s main duty is to control exposure to known vulnerabilities. A high-quality vulnerability tool or toolset can significantly increase the adoption and overall success of a vulnerability management program, even though vulnerability management entails more than just running a scanning tool.

The market is flooded with alternatives and fixes, all of which tout superior attributes. Keep the following in consideration while considering a vulnerability management solution:

  • The effect on an endpoint’s performance is crucial. Vendors who offer vulnerability scanning say more often now that their products are agent-based. Unfortunately, because most of these agents are so large, their performance has a negative influence on endpoints. In order to minimize any impact on productivity, seek for an agent-based solution with a lightweight agent—one that takes up very little space on an endpoint.
  • Visibility that is complete and in real-time is essential. What is vulnerable ought to be immediately obvious to you. Legacy vulnerability tools can make it difficult to see vulnerabilities; for example, network scans taking a long time and producing stale findings and large reports offering little assistance in addressing issues quickly.  Businesses can take quick action to close potentially harmful vulnerabilities in their organization’s security with the use of a single interactive dashboard that includes search and filter options. It is a scan-less solution that is continually active and scanning for flaws as well as vulnerabilities.

Whether they like it or not, businesses are in an ongoing race with cybercriminals, and many are finding it difficult to keep up. Businesses must acknowledge that they are under attack right now and that, if it hasn’t already happened, they will most likely experience a breach in the future. In light of this, it’s critical to be able to identify the breach and be prepared to act when it occurs. The secret is to implement the ideal mix of preventative, detection, and remedial procedures to safeguard your company before a breach occurs. This begins with a thorough, objective evaluation of the existing state of preparedness in comparison to the desired degree of preparation for the future and the formulation of an improvement program that can be monitored over time.

SME: Overcoming The Hurdles of Cross-border Payments

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Fatihah Ramzi, DigitalCFO Asia | 2 November 2022

Arnold Chan, General Manager, Hong Kong & SEA, Airwallex

The ability of banks and other financial institutions to quickly move money across borders remains challenging as technology continues to quickly change how people and businesses handle their financial transactions globally. Many systems are unable to keep up with contemporary technology because they have stayed antiquated. Globalization has created a fantastic and profitable opportunity for this industry’s progress, and the need for a more efficient, cost-effective system is rising.

To find out more about the current landscape of cross-border payments, DigitalCFO Asia spoke with Arnold Chan, General Manager, Hong Kong & SEA, Airwallex.

The Major Hurdles For Cross-border Payments

The hurdles of cross-border payments differ according to company size. One of the key hurdles, according to Arnold Chan, is how companies handle their finances in a more efficient and cost-effective manner. With COVID-19 and macro-environment changes, a lot of businesses in SEA are no longer locally sourcing their suppliers. Their customers are also extending beyond their own country and city. The pandemic also urged many businesses to turn digital and this eventually led to the increasing complexity of B2B payments. 

In the pre-pandemic days, a lot of SMEs were still running their businesses traditionally and it might not necessarily be the most time-efficient manner. Many small businesses reported using cheques before COVID-19 to transfer money internationally to their suppliers but due to employees having to work remotely during the pandemic, business owners found difficulty in relying on such traditional modes of payment. In essence, the pandemic brought to light the necessity for business owners to seek out other methods of payment transfer. 

“The complexity of paying to suppliers, receiving money from customers and procuring advertising avenues have become more difficult,” says Arnold Chan, General Manager, Hong Kong & SEA, Airwallex. 

Traditional finances may not have the kind of cost-efficiency for them to handle. Hence why we are seeing more and more players in the region targeting digital first businesses by using a Fintech solution to address all these payment ports. 

Tackling The Lack Of Transparency In Cross-border Payments

Transparency comes in many forms such as the fee rates, the transfer fee and the currency exchange rate. For executives who are not an expert in FX, they would just take the exchange rate quoted to them as is. However, a lot of the traditional providers have a lot of mark up on the rate. 

“Airwallex, as an advanced Fintech player, we provide absolute transparency in terms of how much mark up we provide on top of interbank rates. Secondly, we are upfront about how much we charge for the transfer fees,” says Arnold Chan, General Manager, Hong Kong & SEA, Airwallex. 

Aiwallex has partners all over the world which means they are able to offer local p[ayment methods to a lot of countries in the world so consumers (businesses) are able to save on the transfer fees and the currency exchange rate. The other area of transparency is the speed of transfer. If businesses go through a traditional provider, it would involve a lot of players and corresponding banks which could result in a lack of ability to locate where the money is at during the transaction. This could cause a number of issues as businesses are obligated to pay their suppliers on time.

The Future Of Cross-border Payments

Real-time payments are now made and delivered 365 days a year, 24 hours a day, seven days a week. This is simply one of the truths of real-time transactions in the current market landscape. Financial organizations therefore must offer 24/7 quick payments.

In contrast to the conventional batch-based end-of-day processing, this introduces the necessity for standby processing in the event that host applications are down due to upkeep or network disruptions. Additionally, banks’ real-time clearing, settlement, and payment systems necessitate 24-hour liquidity management.

With current cross-border payment services already being offered round the clock, there is definitely a demand for it. Therefore, in the next couple of years, we can expect to see more and more businesses digitalizing meaning that there will be a higher demand for FinTech solutions. As such, cross-border payments will definitely be more diverse and hopefully more advanced such that intermediaries might not even need to be as heavily involved in the process as they are today. 

“I do think that there will be a higher need for businesses to make payments to different countries. This can be seen in the macro trends whereby businesses of all sizes are selling to places outside of their own country,” says Arnold Chan, General Manager, Hong Kong & SEA, Airwallex.

Taking The First Step In Adopting Cross-Border Payments

Researching available digital service providers would be the first step. The providers must have secure networks and effectively inform their customers about them. Almost half of users, whether they are individuals or enterprises, worry about fraud when sending money abroad.

Businesses must consider suppliers’ pricing when evaluating them. Nearly half of consumers believe they pay excessive costs for their transactions and receive inadequate exchange rates. Hand in hand with the last point, many businesses wish for greater transparency. That means receipts for each transaction, and the ability to track them. 

Having a large network is crucial as well. When their provider does not operate in the country they want to send money to, many businesses may find it frustrating. Additionally, businesses will need a wider range of payout alternatives so that their foreign business partners can benefit from them and are more likely to want to collaborate with them as a result. These are the key characteristics that a business should seek in service providers if it wants to enjoy a positive cross-border transactional experience.

A Business’ Greatest Fear – Financial Statement Fraud

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Fatihah Ramzi, DigitalCFO Asia | 28 October 2022

Although there are laws and policies in place, it also helps if businesses are aware of how to spot and stop financial statement fraud.

White-collar crimes like financial statement fraud are typically committed by managerial insiders to give a company’s finances a better impression. Fraudsters are driven by personal benefit, such as performance-based pay, the desire to improve the reputation of the company by deceiving potential investors, or the desire to purchase time until financial errors and losses can be adequately rectified.

Fraud on financial statements is an offense of opportunity. Businesses that lack adequate internal controls, use manual accounting procedures, or have dishonest and aggressive executives are more vulnerable. Preventing financial statement fraud from ever occurring is the key to countering it. If it cannot be stopped, it is crucial to locate it as soon as possible.

Financial statement fraud raises concerns with both present and potential shareholders and investors, regardless of the motivation. Large-scale reputational harm, severe regulatory penalties, and even arrests are all possible outcomes.

Some Types of Financial Statement Fraud

There are many different types of business fraud, such as bribery, kickbacks, and payroll fraud. When it comes to financial statement fraud, the majority of charges include willfully distorting accounting to make a company appear more successful through share prices, financial information, or other valuation techniques. Criminals falsify revenue, expenses, liabilities, and assets to present the business in a more favorable way. Here are a few typical methods:

  1. Inadequate or inappropriate disclosures. In order to avoid deceiving the viewer, financial statements must contain information that is both true and transparent. If accounting changes have an effect that materially affect the financial statements, they must be declared. Items including major events, related-party transactions, contingent liabilities, and accounting adjustments are hidden or left out of the financial statements when this kind of fraud is undertaken.
  2. Fabricating expenses.  When a business fails to accurately record all of its expenses, it commits another type of financial statement fraud. The company’s net income is overstated and costs are downplayed, which gives the impression that the company is making more money than it actually is.
  3. Misappropriations. Changing the financial statement to conceal theft or embezzlement by double-entry bookkeeping or the inclusion of fictitious expenses is a significant form of financial statement fraud. Unlike fraud meant to artificially exaggerate the company’s value to investors and the business world, this type of fraud is typically committed by an individual intending to profit themselves.

Warning Signs

1. Business

Business red flags. Potential fraud may be indicated by external circumstances including general industry downturns and extreme departures from peer business norms. An astute auditor will detect organizational behavior and business outcomes that don’t seem to follow the general trends in that sector, such as:

  • Operating margins that are not competitive with rivals in terms of profitability.
  • Large Investments made in volatile industries or during downturns in certain industries.
  • Periods of very high revenue and low expenses that are not seasonal.
  • Operating performance that is very susceptible to economic variables such as unemployment, interest rates, and inflation.

2. Behavioural

At least one behavioral red flag will be shown by fraudsters when they commit their offenses. These behavioral warning signs will manifest in the fraudster’s professional and private lives:

  • A manager or accountant who is struggling financially and/or living over their means.
  • Management behaviors that are dishonest, confrontational, aggressive, and unreasonable.
  • Control concerns, such as a reluctance to delegate responsibility for managing the company’s finances.
  • The management shows excessive concern for maintaining the company’s reputation.

Financial Statement Fraud Detection

The management of the company has the major duty of uncovering financial statement fraud. The best chance of preventing fraud is to have a strong team, including an executive board that will determine the company’s ethical standards and an audit committee made up of internal and external auditors. According to the standards on auditing, auditors are required to get an adequate confidence that financial statements are free from misstatement as a result of either fraud or error. Using the many tools and procedures at their disposal, the auditors’ duties include properly identifying, evaluating, and reacting to fraud risks.

Auditors seek for uneasy connections between financial data that call for further study. Analyzing the connections between the figures in financial accounts provides thorough insight into the financial health of an organization. Identifying the connections between specific financial statement balances is the basis of financial analysis since it enables auditors to spot discrepancies in the numbers.

For instance, a healthy business aims to consistently balance its assets and liabilities. A deviation from past patterns that is unexpected could be a sign that the company is trying to cover up something. A rise in the ratio can indicate hidden liabilities, while a decline might indicate that the business is using a lot of debt to fund operations.

Sales versus cost of goods or services sold is another important ratio to keep in mind (COGS). These figures typically fluctuate concurrently; the more things sold, the more resources and costs needed to generate them. Sales versus accounts receivable also have a direct proportional relationship. Accounts receivable should rise in tandem with sales. Further research is required when one of these numbers deviates from their proportionate connection.

These kinds of analyses, known as comparative ratio analyses, aid auditors in identifying abnormalities in the financial reporting by examining the relationship between two separate financial statement amounts. Figures from the present year are used to establish ratios, which are then contrasted to figures from earlier years, firms, industries, or economies. For the purpose of identifying suspected fraud, a more thorough investigation is needed when there are considerable differences between years or between businesses.

Percentage analysis, both vertically and horizontally, is another method fraud investigators employ to analyze a company’s standing. Vertical analysis looks at the connections between items on any financial statement throughout the course of a single reporting period. The percentages used to indicate the relationships between the components allow for comparison across time. 

The percentage change in each financial statement item from year to year is examined via horizontal analysis. Following changes are computed as percentages of the base period, with the first year serving as the base. Utilizing comparative analysis methods improves the likelihood of spotting fraud by assisting investigators in spotting financial irregularities.

Laws have been established by the authorities to ensure that businesses disclose their financial information honestly while safeguarding the interests of investors. Although there are safeguards in place, it also helps if businesses are aware of how to spot and stop financial statement fraud. By recognizing the warning signs, people can avoid being taken advantage of by dishonest actors trying to conceal losses, launder money, or otherwise deceive gullible investors.

MAS Tightening On Singapore Dollar And Its Struggle To Outpace The US Dollar

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DigitalCFO Newsroom | 12 October 2022

The Singapore dollar (SGD) has weakened against the US dollar for nearly two years now, with losses accruing to 4.3% year-to-date. Nevertheless, this year’s story is less about SGD weakness and more about USD strength.

The Singapore dollar has weakened against the US dollar for nearly two years now, with losses accruing to 4.3% year-to-date. Despite this longer-term trend, the path has been far from smooth. Nevertheless, this year’s story is less about SGD weakness and more about USD strength: out of 32 currencies in the expanded majors category, USD is ranked 5th in terms of year-to-date performance, while SGD is close behind in 7th place. Within the APAC region, SGD has been the dollar which is pegged to USD. 

As a result, the trade-weighted currency index that the Monetary Authority of Singapore (MAS) uses to evaluate the stance of its monetary policy, known as the S$NEER, has appreciated 4.8% YTD despite the near 25% weight that the US dollar holds within the basket. 

The dynamic of a strengthening S$NEER is by design, as the MAS judges that long-term currency appreciation is consistent with its historical trend, as well as Singapore’s strong banking and financial system, deep FX reserves, prudent fiscal policy, and wide current account surpluses. Over the past year, the pace of S$NEER appreciation has been more rapid than usual to offset imported inflationary pressures. 

Since the start of the year, USDSGD has risen by more than 5%.

Monex’s Base Case Sees USDSGD Rising To 1.44, But Risks Are Tilted To The Downside

Given the Singapore dollar’s stronger performance against its regional peers, the year-to- date rally in USDSGD isn’t necessarily a concern for the MAS. However, recent dynamics within the S$NEER basket may be starting to turn. Over the past 24 hours, intervention by the Bank of Japan to lower USDJPY has posed a new threat to this year’s upward trend in USDSGD. Since JPY holds the fifth-largest weighting in the S$NEER basket, the fact that BoJ officials are actively buying yen to prevent further depreciation is beginning to place downward pressure on the S$NEER.

Accordingly, the possibility of pushback from regional central banks could lead currencies such as JPY, KRW, and CNY to strengthen against the dollar, in which case USDSGD will likely fall, acting as a counterweight to maintain the MAS’s hawkish monetary policy stance. In this risk case, markets might do all of the work themselves and push USDSGD lower in anticipation of MAS intervention, a credible risk considering Singapore’s FX reserves are valued at US$278bn, or 65% of GDP. Should the central bank still judge that the S$NEER is not appreciating in line with its target, however, direct intervention by the MAS is a real possibility.

MAS To Continue Tightening In October As Inflation Risks Are Skewed To The Upside

The main reason for the Singapore dollar’s strength relative to its APAC peers stems from the MAS’s aggressive response to high inflation, which has risen to 7.0% YoY as of July. Typically, the MAS adjusts policy twice per year, in April and October. In 2022, however, the MAS has tightened policy three times, once in the scheduled April meeting and twice in impromptu inter-meeting announcements. Within those meetings, the central bank has increased the slope of the S$NEER band all three times and re-centred the midpoint of the band higher twice. 

As we approach the MAS’s next meeting, which does not yet have a firm date but is anticipated to occur between October 10th and 14th, there is a reasonable chance that we could see another adjustment, especially considering the S$NEER is merely 0.4% below estimates of the top end of the band, inflation pressures continue to climb, and MAS managing director Ravi Menon recently warned that medium-term inflation will likely be “higher for longer” going forward.

The pace of inflation has steadily risen, with year-on-year headline CPI either rising or holding flat over the last 11 months. The 7.0% all-items print in July was up three tenths from the month prior, driven by food, electricity, and gas, while core CPI reached 4.8% YoY, which was up from 4.4% in June.

Both of those metrics are running above the MAS’s July forecasts, which were already upgraded to ranges of 5 to 6% for headline and 3 to 4% for core at that time.

Even if August’s CPI, which is released on Friday, September 23rd, were to ease, it is highly unlikely that either headline or core inflation would fall back to the MAS’s forecast ranges. Currently, the median economist forecast points to 7.2% headline and 5.0% core CPI over that period.

Turning to monetary policy, the degree of tightening slowed at the most recent MAS meeting. In April, both the slope and midpoint of the band were adjusted, but back in July, the MAS chose to merely maintain the slope of S$NEER appreciation while re-centring the target. The MAS is unlikely to change the width of the band, as it typically does so only when the degree of economic uncertainty has dramatically changed, and it has not done so in a decade. 

Re-centring the band higher would be hawkish and have a large near-term impact on inflation. While increasing the slope of the band would also be hawkish and is arguably a more aggressive policy action over the medium to long run than a re-centring, it would take more time to impact inflation than re-centring alone, which is why both policies are frequently combined when decisive action is needed to lean against inflation.

Given current inflation dynamics and the slight distance between the S$NEER and the top end of its range, Monex believes that it is highly likely that the MAS will readjust the centre of the band upward. While Singapore’s growth outlook is still positive, with private sector economists expecting 3.6% growth in 2022, it has deteriorated considerably over the course of the third quarter, making the combination of a recentring and an increase in the slope less likely.

Nevertheless, the risk of maximum hawkishness cannot be ignored, considering the strength of the latest inflation data and the focus on upside inflation risks in recent commentary from MAS officials.

Employee Wellness At The Forefront Of Today’s Workforce

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Fatihah Ramzi, DigitalCFO Asia | 11 October 2022

Employee performance directly affects a company’s profitability, therefore it’s critical for them to be in top physical and mental condition to carry out their responsibilities to the fullest.

The success of an organization and a business depends on employee wellness. It has an effect on a workplace’s culture, resources, performance, and, inevitably, its financial performance. As a result, employee well-being—both physically and mentally—is a bigger concern than HR. In actuality, it serves as the cornerstone for a company’s expansion, stability, resilience, and sustainability. However, any company or organization must first comprehend what employee wellbeing is in order to appreciate its significance and effectively address the issue.

Wellness includes both physical and mental health. Its popularity as a notion in the workplace has developed over the last 30 years or so. It concentrates on assisting employees in taking control of their own health, quality of life, and mental wellbeing, which in turn affects how well they perform at work. As a result, employee wellness considers proactive ways to cultivate and encourage better lifestyles and attitudes in addition to reducing time lost from work due to illness.

Employee wellness takes a personal approach and motivates people to lead healthy lives. This is done for their benefit and the good of the workplace culture. It includes a broad range of topics, including health promotion, disease prevention, and the elements that contribute to an individual’s physical and mental well-being. Most importantly, it’s about empowering people to take charge of their own health and make better decisions for it.

Employee wellness is significant to company executives because of the high costs of stress and absenteeism as well as the obvious advantages of enhancing efficiency and recruiting and retaining talent. Businesses need to develop workplace regulations to decrease the number of burnouts and medical leaves taken by workers. Here are some suggestions for improving your employee wellness program.

Physical Wellness

Helping workers attain good physical health entails assisting them in reducing their chance of chronic illnesses, maintaining a healthy weight, and avoiding other problems like headaches or persistent fatigue. In fact, encouraging physical wellbeing among employees can lengthen their lives. Through yearly biometric exams, yearly corporate flu shot clinics, and the provision of wholesome workplace snacks in the pantry, employers can include the physical aspect of wellness in their employee wellness program.

Emotional Wellness

Although it can be more difficult to talk about emotional wellness at work, companies must do so. Being conscious of being in touch with one’s emotions, thoughts, and feelings is referred to as emotional wellness. A healthy mental state and well-being are supported by positive emotional wellness. Stress reduction, emotional intelligence, and good mental health practices are included (like meditation or mindfulness).

Employees are unable to perform or feel their best at work without good emotional health. Employers can include the emotional aspect in their employee wellness program by implementing stress management techniques, group relaxation exercises, on-site meditation sessions, and more.

Social Wellness

Another facet of employee wellbeing that is frequently disregarded is social wellness. Employers are growing more and more conscious of the detrimental effects of loneliness at work. For employees to be happy at work and feel general satisfaction, there must be strong working connections and possibilities for social engagement. Actually, lonely employees are considerably more likely to feel cut off from their occupations, which can result in subpar work output.

Employers can strengthen employee relationships by incorporating the social aspect of wellness into their employee wellness program via team excursions and activities as well as work celebrations. Even setting up social spaces in the workplace can foster a sense of community among your staff. 

By educating, empowering, illuminating, and inspiring employees about the health difficulties they face today, health dangers they may encounter in the future, and how to prevent them from happening, wellness’ main objective is to promote employee health. You will undoubtedly boost worker morale and produce consistently good work if you take note of some of these activities and incorporate them into your employee health program.

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