Chocolate Finance targets idle SME cash with new business account

Walter de Oude, CEO of Chocolate Finance, aims to convert idle cash held by small businesses into growth opportunities with the launch of Chocolate Business Accounts. The new product is designed for companies that want to generate returns on spare operating cash while retaining easy access to funds when needed. Unlike traditional bank accounts or fixed deposits, Chocolate Business is a cash managed account that invests funds in various investment products to generate returns, albeit with some investment risk.

Since its inception two years ago, the company has managed about US$1.23 billion in assets and over 150,000 customers. Chocolate Finance cites an industry survey indicating that Singaporean SMEs lose around US$616 million annually in potential interest by leaving idle cash in low-yield accounts, with 45% of SMEs prioritizing liquidity.

The product currently offers 1.5% per annum on the first SGD300,000, with the potential to earn up to 1.5% per annum on larger amounts. Businesses can fund their accounts via FAST transfers or PayNow, with no minimum or maximum deposit requirements. Withdrawals are possible at any time, with no fixed tenure, withdrawal charges, or penalties.

Chocolate Business is regulated by the Monetary Authority of Singapore and operates under Chocfin Pte Ltd. It has secured backing from Peak XV Partners, Prosus, Saison Capital, and GFC. This strategic move by Chocolate Finance comes as cash management gains visibility in Southeast Asia's startup and SME ecosystem, particularly in Singapore, which has a high concentration of SMEs and a sophisticated financial infrastructure.

While competition exists from assemblage finance platforms and incumbent banks, the education challenge in helping business owners understand the risks and benefits of managed accounts will shape the product's adoption.