{"id":2840,"date":"2020-03-23T17:44:22","date_gmt":"2020-03-23T17:44:22","guid":{"rendered":"http:\/\/localhost\/2020\/swoopMW20\/?post_type=knowledge-hub&#038;p=2840"},"modified":"2024-08-13T19:16:12","modified_gmt":"2024-08-13T19:16:12","slug":"chocs-customer-handles-own-collections","status":"publish","type":"knowledge-hub","link":"https:\/\/swoopfunding.com\/za\/knowledge-hub\/chocs-customer-handles-own-collections\/","title":{"rendered":"Customer handles own collections (CHOCs)"},"content":{"rendered":"\n <div class=\"faq-accordion faq-accordion560\">\n <div class=\"card\">\n <div class=\"card-header\" id=\"heading0560\">\n <h5 class=\"mb-0\">\n <a class=\"btn btn-link\" data-toggle=\"collapse\" data-target=\"#collapse0560\" aria-expanded=\"true\" aria-controls=\"collapse0\">\n What is Customer Handles Own Collections (CHOC\u2019s)? <\/a>\n <\/h5>\n <\/div>\n\n <div id=\"collapse0560\" class=\"collapse show\" aria-labelledby=\"heading0\" data-parent=\".faq-accordion560\">\n <div class=\"card-body\">\n <p>CHOCs (\u2018Customer Handles Own Collections\u2019) is a hybrid of <a href=\"https:\/\/swoopfunding.com\/za\/knowledge-hub\/invoice-factoring\">invoice factoring<\/a> and <a href=\"https:\/\/swoopfunding.com\/za\/knowledge-hub\/invoice-discounting\">invoice discounting<\/a>. It\u2019s a disclosed (non-confidential) facility, like <a href=\"https:\/\/swoopfunding.com\/za\/knowledge-hub\/invoice-factoring\">factoring<\/a>, but with a CHOCs facility you continue to handle your own credit control, like invoice discounting.<\/p>\n<p>With a CHOCs facility, you chase your customers for payment and use your own credit control processes, which is why it\u2019s also known as \u2018Customer Handles Own Credit Control\u2019 or CHOCC. In this way, it\u2019s similar to invoice discounting.<\/p>\n<p>The key difference is that your customers pay the invoice finance provider rather than you. So it\u2019s usually disclosed. (There is, however, a variant known as confidential CHOCs.)<\/p>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"card\">\n <div class=\"card-header\" id=\"heading1560\">\n <h5 class=\"mb-0\">\n <a class=\"btn btn-link\" data-toggle=\"collapse\" data-target=\"#collapse1560\" aria-expanded=\"true\" aria-controls=\"collapse1\">\n Why choose CHOC\u2019s? <\/a>\n <\/h5>\n <\/div>\n\n <div id=\"collapse1560\" class=\"collapse \" aria-labelledby=\"heading1\" data-parent=\".faq-accordion560\">\n <div class=\"card-body\">\n <p>CHOCs might be a good option if:<\/p>\n<ul>\n<li>your business doesn\u2019t qualify for invoice discounting by being too early-stage \u2013 you still have to show you have the capability to chase invoices<\/li>\n<li>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 \u2013 making for lots of customers who need chasing<\/li>\n<li>you prefer to maintain relationships with customers \u2013 bear in mind that your clients will know you\u2019re using the facility because they\u2019re paying the finance provider, not you<\/li>\n<\/ul>\n<p>Like all <a href=\"https:\/\/swoopfunding.com\/za\/knowledge-hub\/invoice-finance\">invoice finance<\/a>, 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.<\/p>\n<p>CHOCs are suitable if you\u2019d like to maintain a direct relationship with your client or for early-stage companies that don\u2019t qualify for invoice discounting, as long as they can prove they have the in-house capacity to chase outstanding payments. They can also offer a more cost-effective option for companies with lots of small customers.<\/p>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"card\">\n <div class=\"card-header\" id=\"heading2560\">\n <h5 class=\"mb-0\">\n <a class=\"btn btn-link\" data-toggle=\"collapse\" data-target=\"#collapse2560\" aria-expanded=\"true\" aria-controls=\"collapse2\">\n Have you also considered? <\/a>\n <\/h5>\n <\/div>\n\n <div id=\"collapse2560\" class=\"collapse \" aria-labelledby=\"heading2\" data-parent=\".faq-accordion560\">\n <div class=\"card-body\">\n <p><strong>Invoice discounting<\/strong><\/p>\n<p><a href=\"https:\/\/swoopfunding.com\/za\/knowledge-hub\/invoice-discounting\">Invoice discounting<\/a> is the simplest type of invoice finance. It involves a lender advancing you money against unpaid invoices and charging a fee based on the value. This form of finance is suitable for bigger companies with a relatively high revenue as it allows them to secure funding against their entire sales ledger.<br \/>\nInvoice discounting is confidential, so your customers don\u2019t know you\u2019re using their invoice as collateral. Your company remains in charge of its own credit collection. It\u2019s also considered riskier so your lender may require evidence that your customers pay promptly and you have in-house capacity to chase outstanding payments.<\/p>\n<p><strong>Invoice factoring<\/strong><\/p>\n<p><a href=\"https:\/\/swoopfunding.com\/za\/knowledge-hub\/invoice-factoring\">Invoice factoring<\/a> also lets bigger companies borrow money against their sales ledger, but it\u2019s different to invoice discounting because the process is disclosed. The lender takes control of your credit collection and deals directly with your customers. They pay the lender, who then forwards you the balance less their fee.<\/p>\n<p>Invoice finance can benefit smaller businesses as it means they don\u2019t have to chase their outstanding payments, although they have to prove to the lender they generate a reliable revenue. However, it may not be cost-effective for SMEs with fluctuating cash flows.<\/p>\n<p><strong>Selective invoice financing<\/strong><\/p>\n<p><a href=\"https:\/\/swoopfunding.com\/za\/knowledge-hub\/asset-based-lending\">Selective invoice financing<\/a> lets your company borrow against specific invoices, rather than your entire sales ledger. This form of invoice finance is suitable if your company generates a significant proportion of its income from large, steady customers, and you only want to finance those invoices. Selective invoice financing can also help SMEs raise working capital if they have fluctuating cash flows, as borrowing against their sales ledger may not be cost-effective.<br \/>\nSelective invoice financing comes in two forms: selective invoice discounting and spot factoring.<\/p>\n<p><strong>Selective invoice discounting<\/strong><\/p>\n<p><a href=\"https:\/\/swoopfunding.com\/za\/knowledge-hub\/selective-invoice-discounting\">Selective invoice discounting<\/a> works in the same way as invoice discounting, where a lender advances you money against outstanding invoices. The main difference is you choose the invoices you\u2019d like to finance rather than your company\u2019s whole sales ledger. As such, it\u2019s useful for companies seeking to borrow against invoices issued to a few big customers instead of a lot of smaller customers.<\/p>\n<p>Selective invoice discounting is also similar to regular invoice discounting because it\u2019s confidential, so it could be the right option if your company would prefer to hide from your customers that you\u2019re securing finance against their invoices.<\/p>\n<p><strong>Spot factoring<\/strong><\/p>\n<p><a href=\"https:\/\/swoopfunding.com\/za\/knowledge-hub\/spot-factoring\">Spot factoring<\/a> allows you to borrow money against specific unpaid invoices rather than your sales ledger, so it\u2019s also suitable for companies with at least a few large customers. The main difference with selective invoice discounting is that spot factoring is disclosed. You hand over control of the invoices you choose to finance to the lender who collects payment from your customer and forwards your company the balance less its fee.<\/p>\n<p>Spot factoring may suit SMEs that don\u2019t have the resources to chase outstanding payments and are happy to let a lender take the responsibility on their behalf.<\/p>\n<p><strong>Confidential invoice finance<\/strong><\/p>\n<p><a href=\"https:\/\/swoopfunding.com\/za\/knowledge-hub\/confidential-invoice-finance\">Confidential invoice finance<\/a> is a suitable funding option if you prefer your customers to remain unaware that you\u2019re securing finance against their invoices.<\/p>\n<p>Confidential invoice finance refers to forms of invoice finance that aren\u2019t disclosed to your customers. We\u2019ve already described invoice discounting, but confidential invoice factoring and CHOCs (Customer Handles Own Collections) are other examples of this type of finance.<\/p>\n<p><strong>Confidential invoice factoring<\/strong><\/p>\n<p><a href=\"https:\/\/swoopfunding.com\/za\/knowledge-hub\/confidential-invoice-factoring\">Confidential invoice factoring<\/a> works like regular invoice factoring, where a lender advances your company money against unpaid invoices while taking over responsibility for credit collection and dealing with your customers. However, the key difference is it offers the same level of confidentiality as invoice discounting.<\/p>\n<p>Confidential invoice factoring doesn\u2019t disclose you\u2019re using invoice financing because the lender acts as your accounts department. That means the lender uses your company name and branding when it contacts your customers about outstanding payments. They also use a dedicated line which shows up as your company\u2019s phone number when calling your customers.<\/p>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n \n <script type=\"application\/ld+json\">\n    {\n        \"@context\": \"https:\/\/schema.org\",\n        \"@type\": \"FAQPage\",\n        \"mainEntity\": [\n                                {\n                \"@type\": \"Question\",\n                \"name\": \"What is Customer Handles Own Collections (CHOC\u2019s)? \",\n                \"acceptedAnswer\": {\n                    \"@type\": \"Answer\",\n                    \"text\": \"CHOCs (\u2018Customer Handles Own Collections\u2019) is a hybrid of invoice factoring and invoice discounting. It\u2019s 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 it\u2019s also known as \u2018Customer Handles Own Credit Control\u2019 or CHOCC. In this way, it\u2019s similar to invoice discounting. The key difference is that your customers pay the invoice finance provider rather than you. So it\u2019s usually disclosed. (There is, however, a variant known as confidential CHOCs.)\"\n                }\n            },                                {\n                \"@type\": \"Question\",\n                \"name\": \"Why choose CHOC\u2019s?\",\n                \"acceptedAnswer\": {\n                    \"@type\": \"Answer\",\n                    \"text\": \"CHOCs might be a good option if:  your business doesn\u2019t qualify for invoice discounting by being too early-stage \u2013 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 \u2013 making for lots of customers who need chasing you prefer to maintain relationships with customers \u2013 bear in mind that your clients will know you\u2019re using the facility because they\u2019re 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. CHOCs are suitable if you\u2019d like to maintain a direct relationship with your client or for early-stage companies that don\u2019t qualify for invoice discounting, as long as they can prove they have the in-house capacity to chase outstanding payments. They can also offer a more cost-effective option for companies with lots of small customers.\"\n                }\n            },                                {\n                \"@type\": \"Question\",\n                \"name\": \"Have you also considered?\",\n                \"acceptedAnswer\": {\n                    \"@type\": \"Answer\",\n                    \"text\": \"Invoice discounting Invoice discounting is the simplest type of invoice finance. It involves a lender advancing you money against unpaid invoices and charging a fee based on the value. This form of finance is suitable for bigger companies with a relatively high revenue as it allows them to secure funding against their entire sales ledger. Invoice discounting is confidential, so your customers don\u2019t know you\u2019re using their invoice as collateral. Your company remains in charge of its own credit collection. It\u2019s also considered riskier so your lender may require evidence that your customers pay promptly and you have in-house capacity to chase outstanding payments. Invoice factoring Invoice factoring also lets bigger companies borrow money against their sales ledger, but it\u2019s different to invoice discounting because the process is disclosed. The lender takes control of your credit collection and deals directly with your customers. They pay the lender, who then forwards you the balance less their fee. Invoice finance can benefit smaller businesses as it means they don\u2019t have to chase their outstanding payments, although they have to prove to the lender they generate a reliable revenue. However, it may not be cost-effective for SMEs with fluctuating cash flows. Selective invoice financing Selective invoice financing lets your company borrow against specific invoices, rather than your entire sales ledger. This form of invoice finance is suitable if your company generates a significant proportion of its income from large, steady customers, and you only want to finance those invoices. Selective invoice financing can also help SMEs raise working capital if they have fluctuating cash flows, as borrowing against their sales ledger may not be cost-effective. Selective invoice financing comes in two forms: selective invoice discounting and spot factoring. Selective invoice discounting Selective invoice discounting works in the same way as invoice discounting, where a lender advances you money against outstanding invoices. The main difference is you choose the invoices you\u2019d like to finance rather than your company\u2019s whole sales ledger. As such, it\u2019s useful for companies seeking to borrow against invoices issued to a few big customers instead of a lot of smaller customers. Selective invoice discounting is also similar to regular invoice discounting because it\u2019s confidential, so it could be the right option if your company would prefer to hide from your customers that you\u2019re securing finance against their invoices. Spot factoring Spot factoring allows you to borrow money against specific unpaid invoices rather than your sales ledger, so it\u2019s also suitable for companies with at least a few large customers. The main difference with selective invoice discounting is that spot factoring is disclosed. You hand over control of the invoices you choose to finance to the lender who collects payment from your customer and forwards your company the balance less its fee. Spot factoring may suit SMEs that don\u2019t have the resources to chase outstanding payments and are happy to let a lender take the responsibility on their behalf. Confidential invoice finance Confidential invoice finance is a suitable funding option if you prefer your customers to remain unaware that you\u2019re securing finance against their invoices. Confidential invoice finance refers to forms of invoice finance that aren\u2019t disclosed to your customers. We\u2019ve already described invoice discounting, but confidential invoice factoring and CHOCs (Customer Handles Own Collections) are other examples of this type of finance. Confidential invoice factoring Confidential invoice factoring works like regular invoice factoring, where a lender advances your company money against unpaid invoices while taking over responsibility for credit collection and dealing with your customers. However, the key difference is it offers the same level of confidentiality as invoice discounting. Confidential invoice factoring doesn\u2019t disclose you\u2019re using invoice financing because the lender acts as your accounts department. That means the lender uses your company name and branding when it contacts your customers about outstanding payments. They also use a dedicated line which shows up as your company\u2019s phone number when calling your customers.\"\n                }\n            }          ]\n    }\n    <\/script>\n \n","protected":false},"excerpt":{"rendered":"","protected":false},"author":39,"menu_order":53,"template":"","segment":[298],"class_list":["post-2840","knowledge-hub","type-knowledge-hub","status-publish","hentry","segment-invoice-finance"],"acf":[],"featured_image_urls_v2":{"full":"","thumbnail":"","medium":"","medium_large":"","large":"","1536x1536":"","2048x2048":"","image_blog":"","image_blog_full":"","image_podcast":"","image_banking":"","image_blog_internal":"","image_blog_medium":"","image_single_banking":""},"post_excerpt_stackable_v2":"<p>What is Customer Handles Own Collections (CHOC\u2019s)? CHOCs (\u2018Customer Handles Own Collections\u2019) is a hybrid of invoice factoring and invoice discounting. It\u2019s 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 it\u2019s also known as \u2018Customer Handles Own Credit Control\u2019 or CHOCC. In this way, it\u2019s similar to invoice discounting. The key difference is that your customers pay the invoice finance provider rather than you. So it\u2019s&hellip;<\/p>\n","category_list_v2":"","author_info_v2":{"name":"Alexandre Colucci","url":"https:\/\/swoopfunding.com\/za\/author\/alexcolucci\/"},"comments_num_v2":"0 comments","_links":{"self":[{"href":"https:\/\/swoopfunding.com\/za\/wp-json\/wp\/v2\/knowledge-hub\/2840","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/swoopfunding.com\/za\/wp-json\/wp\/v2\/knowledge-hub"}],"about":[{"href":"https:\/\/swoopfunding.com\/za\/wp-json\/wp\/v2\/types\/knowledge-hub"}],"author":[{"embeddable":true,"href":"https:\/\/swoopfunding.com\/za\/wp-json\/wp\/v2\/users\/39"}],"version-history":[{"count":0,"href":"https:\/\/swoopfunding.com\/za\/wp-json\/wp\/v2\/knowledge-hub\/2840\/revisions"}],"wp:attachment":[{"href":"https:\/\/swoopfunding.com\/za\/wp-json\/wp\/v2\/media?parent=2840"}],"wp:term":[{"taxonomy":"segment","embeddable":true,"href":"https:\/\/swoopfunding.com\/za\/wp-json\/wp\/v2\/segment?post=2840"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}