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What is CHOCS invoice factoring?
CHOCS (Client Handles Own Collections Service) is a type of invoice factoring that allows you to manage your own credit control and chase your own debts.
While your credit control is still handled in house, funds are released by your invoice finance provider to improve your business cash flow.
It works well for businesses that already have robust credit control systems that they wish to retain, whilst benefiting from improved cash flow.
It operates as a hybrid between invoice factoring and invoice discounting. It is a disclosed service, meaning it is not confidential, but with credit control remaining in house.
How does it work?
CHOCS works by increasing your business cashflow by releasing up to 95% of the value of your invoices.
Unlike debt factoring facilities, CHOCS allows you to retain control of your credit control to ensure that your debt collection doesn’t interfere with your customer relationships.
The process works as follows:
- An invoice is raised to your customer – You raise an invoice to your customer and give a copy to your finance provider.
- You receive payment from your invoice finance provider – Receive up to 95% of the invoiced amount instantly from your funding provider.
- The invoice is settled and you receive the balance – Minus any charges due for the credit facility.
Will I be eligible for CHOCS factoring?
If your business accepts delayed payment from other businesses on either 30, 60 or 90 day terms, there is a great chance of your business being eligible for CHOCS factoring.
To check your eligibility, use our online invoice finance comparison tool to find out which lenders will accept your business, and which will offer the best terms for your business.
Keep reading – CHOCC.
What are the advantages and disadvantages of CHOCS invoice factoring?
As with any financial product, such as a commercial mortgage or business loan, there are advantages and disadvantages to consider when taking out this type of borrowing. They are:
Advantages
- It improves your business cash flow – Cashflow is crucial to businesses and invoice financing improves it significantly. Improved cashflow allows you to focus on what you do best, running your business, without being forced into short-term sacrifices.
- Its low cost – This type of invoice finance is low cost as you’re handling your own collections, making it one of the more of the cost cost-efficient options out there.
- It can grow with your business – The improved cashflow offered by this type of facility offers a great platform to grow a business.
- It allows you to maintain a direct relationship with your customer – As you handle your own credit control, it allows you to maintain lots of contact with your customers, and even push for more business when the opportunity arises.
Disadvantages
- It costs money – While the cost of CHOCS is lower than confidential invoice discounting, as you’re handling your own credit control, it does still cost money.
- The facility is disclosed – This is only a problem if you don’t want your customers to know that you’re financing your invoices, but it’s still a consideration.
What is the best way to raise finance for my business using a CHOCS facility?
The best way to secure invoice finance in the UK is by using the ABC Finance invoice finance comparison tool.
Our tool allows you to find the best deal without the need for time consuming sales phone calls.
You simply input your details into the system and within minutes, lenders will start competing for your business, uploading their best deal directly into the platform.
You then simply review the offers, choose your preferred option and proceed through a single button click.
Of course, if you’re unsure which offer is best for you, our team of experts are on hand to explain each offer and guide you where needed.
