The relationship a business holds with their customers is incredibly important to any company owner. You spend time and energy building that rapport to have reliable and consistent working relationships, and a lot of the time your business depends on it. This is why it is often the case that there can be a level of concern when deciding whether or not to enter an invoice finance facility. You may not necessarily want a lender to be contacting your clients, chasing them for payments, when there may be a level of concern that it could negatively impact your working relationship with your customer. This is completely understandable, but what many people do not realise is that there are many options under the ‘umbrella’ of invoice finance, including facilities where you retain credit control.


What is CHOCC?

CHOCC stands for Clients Handles Own Credit Control – it is very similar to a factoring facility, but the company manages collecting payments from their debtors as opposed to invoice factoring where this is in the control of the lender. We often think of CHOCC as a hybrid solution between factoring and invoice discounting, where the facility is disclosed but the responsibility of collecting payment lies with the business owner.

CHOCC works in exactly the same way as other invoice finance facilities – you complete work or provide a product or service to a client and send them invoices on your credit terms. These credit terms are very useful for your customer as it gives them an element of flexibility. However, this can leave you waiting to be paid. You might have heard the term ‘cash is king’ but in many industries, ‘cashflow is king’ makes more sense – if you had received payment on day 1, this would give you the ability to take on more jobs, hire more staff, repair vehicles etc.

Let’s say for example – a construction company completes work on a building, sends out their invoices and must now wait an average of 45 days before they are paid. On day 7 the company receives a phone call asking for their services on a new job – and it’s a big contract requiring a lot of staff and supplies. The company has to turn down this amazing opportunity – purely because they do not have the cash to pay for everything they need in order to complete the job. This is where invoice finance – and CHOCC, as part of that umbrella – comes in. The day you send your invoices to your customers, you also send the invoices to a lender. You then receive up to 90% of the value of those invoices the same day. Then, when your customers pay, you receive the final 10% minus the lender’s fee. It’s as simple as that – receiving that cash on day 1 leaves you open to faster growth and more opportunities. Although there is a lender’s fee attached to receiving the final amount of the invoice, this is often recouped many times over with the possibilities for growth which would not have been there had the facility not been in place.


The Advantages of a CHOCC Facility

The main advantage of a CHOCC facility is that you keep control of handling your client’s payments. You have all of the benefits of a factoring facility with receiving up to 90% of the invoice value on day 1, but you are able to keep that relationship with your customer by being the one to chase payment. This should leave you feeling more comfortable with knowing that you can keep those relationships with your clients and not have a lender contacting them.

The other main advantage of having a CHOCC facility is the benefit of having an invoice finance facility in itself – unlocking the cash from those unpaid invoices can open a world of opportunity  – growing your business quicker than if you were having to wait for the money to arrive. There are a huge amount of businesses in the UK and around the world using these facilities, particularly in the following industries: recruitment, construction, manufacturing, transport and haulage, printing and new-start companies.


The Disadvantages of a CHOCC Facility

One disadvantage of choosing a CHOCC facility is that bear the responsibility of credit control which adds to the administrative duties of your business. There is little difference in the fees that a lender is owed between a factoring and CHOCC facility, so for a small amount of cost you could potentially have one less task to do in chasing your clients.

The other disadvantage of a CHOCC facility is that the information regarding an invoice finance facility will be disclosed – for many businesses this will not be an issue as invoice finance is so widely used now, but some company owners may feel they would like to keep this private. If that is the case, then an invoice discounting facility is more appropriate – but the lender will retain credit control.



Is there lower fees for a CHOCC facility?

There can be lower fees when a lender is not providing credit control – however not all lenders offer CHOCC. It is therefore important to work with someone such as Contact Business Finance who has knowledge of a broad range of lenders and can find the right fit for you.

Will my customers know I use a CHOCC facility?

Unlike invoice discounting, or confidential invoice discounting (CID), a CHOCC facility is fully disclosed – meaning the lender’s notice of assignment and bank details will appear at the bottom of invoices.

Do I have the option to choose which invoices I put through the facility?

Yes, you can select which debtors you would like to be included in your CHOCC facility. However, this does mean the rates would not be as competitive as there would be a smaller amount of turnover going through the lender.

How do I get a CHOCC facility?

Your first port of call should be to speak to Contact Business Finance. We are a commercial finance brokerage who can put you in contact with the most suitable lender in a free-of-cost, confidential service. All it takes is a quick 15-minute phone call – we can talk to you about you, your business and your funding requirements. We can then go to the market for you and find out the best invoice finance facility options.

We have looked at what a CHOCC facility is, how they work and the benefits and drawbacks that could come in to play. Ultimately, it is the decision of the business as to whether they want to handle their own credit control or leave this responsibility to the lender. It is all down to the preferences and priorities of the company, and at Contact Business Finance we can help you find the facility that suits you best. Give us a call on 01902 219260 or email