CHOCC / Customer Handles Own Collection
If you’re a new or small business wanting to unlock cash in unpaid invoices, CHOCC could be worth considering. Learn all about CHOCC, how it works and how it compares to invoice factoring and discounting below.
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CHOCC meaning in invoice finance
CHOCC (sometimes called CHOC) stands for Customer Handles Own Credit Control/Collection. This is where you’re responsible for collecting invoice payments from your customers yourself, rather than the lender, like with invoice factoring.
With CHOCC, you must also disclose that you’re working with a financing company; it’s not confidential like invoice factoring.
CHOCC vs invoice factoring and discounting
CHOCC is essentially a product that sits somewhere between invoice discounting and factoring, so if you don’t know which invoice finance product is best suited for your business, here’s a quick comparison table to help you decide:
| CHOCC | Invoice discounting | Invoice factoring |
|---|---|---|
| Not confidential | Confidential | Not confidential |
| Chase invoice payment yourself | Chase invoice payment yourself | Factoring company chase invoicing for you |
| For newer and smaller businesses | Typically for established businesses | For any age business |
| Lower fees | Lower fees | Higher fees |
Advantages of CHOCC
- Better cash flow. By releasing funds from unpaid invoices, you can better manage your cash flow, helping keep business operations predictable and running smoothly.
- Maintain control over customer relationships. Maintaining friendly relationships is essential in any stage of business, but particularly in those first few years. With CHOCC, you always control your relationships.
- Lower cost. Unlike factoring, CHOCC is a lower-cost invoice finance product. That’s because you’re not paying someone else to manage credit control.
Disadvantages of CHOCC
- Taking on debt. CHOCC is essentially a loan against your outstanding invoice. The invoice finance company gives you an ‘advance’ on your invoice payment, which you then have to repay once the customer pays you. If your customer doesn’t pay, you need to repay the lender from your own funds.
- More admin means you need resources. As you manage credit control yourself, you have to take on the administrative burden. Which, if you’re a small business, can easily become a drain on your limited resources.
- Risk of late payment. As you take on credit control, if your customer pays late, it can cause problems for your business, as the late payment risk lies with you.
Is CHOCC the right invoice finance product for my business?
A ‘customer handles own collection’ product makes invoice financing accessible to businesses that might not be eligible for other products — it can be a good option for businesses in their infancy or smaller businesses. Invoice discounting predominantly requires an established trading history.
If you’re looking for a solution where you can access cash quickly (usually within 24 hours) while maintaining control and chasing invoice payment yourself, then it could be worth considering.
How to find the right CHOCC provider
At Capalona, we’re brokers, which means we exist to help businesses like yours quickly find and compare lenders. Our business finance comparison tool makes it easy to instantly compare eligible invoice finance products.
Simply share a few details about what you’re looking for, and we’ll show you what’s on offer.
It’s 100% free, there’s no obligation to accept any offer and getting a quote doesn’t affect your credit score.
Compare CHOCC and invoice finance products.
About the author
Adrian T
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Amazingly fast, efficient service, minimal paperwork. So much faster than my business bank of twelve years.
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