CHOCs (‘Customer Handles Own Collections’)

Quick facts

CHOCs (‘Customer Handles Own Collections’) is a hybrid of invoice factoring and invoice discounting. It’s a disclosed (non-confidential) facility, like factoring, but with a CHOCs facility you continue to handle your own credit control, like invoice discounting.

With a CHOCs facility, you chase your customers for payment and use your own credit control processes, which is why also known as ‘Customer Handles Own Credit Control’ or CHOCC. In this way it’s similar to invoice discounting.

The key difference is that your customers pay the invoice finance provider rather than you. So it’s usually disclosed. (There is however a variant known as confidential CHOCS.)

CHOCs might be a good option if:

  • your business doesn’t qualify for invoice discounting by being too early-stage – you still have to show you have the capability to chase invoices
  • you prefer to avoid the extra admin costs involved with outsourcing credit control to a finance provider (as you would with factoring). This is especially relevant if you typically raise multiple low-value invoices – making for lots of customers who need chasing
  • you prefer to maintain relationships with customers – bear in mind that your clients will know you’re using the facility because they’re paying the finance provider, not you.

Like all invoice finance, a lender will release up to 95% of the value of your invoices. The remaining 5% will also be made available when your customers pay.

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