Frequently Asked

Questions

1.     Medical Receivables
2.     Factoring Account Receivables
3.     Notes (Cash today is worth more than cash tomorrow!)
4.     Simultaneous Closing
5.     Owner Financing

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1.     Medical Receivables

If I have been turned down for bank loans can I still qualify for Medical Receivable Funding?  Yes!  Your credit rating is less important than is the credit of your payors -- insurance companies and the state or feederal government.

If medical receivables funding is so effective in producing solid, dependable cash flow, why haven't I heard of it before?  The business of advance funding of receivables is one of the world's oldest methods of increasing working capital for business, but has only recently been available to health care providers.

Isn't medical receivables funding similar to a bank loan? No!  Unlike a bank loan, medical receivables funding provides debt-free immediate access to unlimited working capital. 

Are collateral and personal guarantees needed to secure medical receivables funding?  No!  The funding source only requires a security interest in the provider's receivables. 

Isn't it risky to turn my receivables over to a funding source to collect them?  No!  Many providers who may have initially felt this way, now find the funding source successful in improving their bottom lines by increasing overall percentage of claims collected, decreasing the reimbursement interval and reducing administrative cost. 

Am I required to draw cash advances every week? No! The client can factor as little or often as he or she needs to, depending on working capital requirements. 

Besides smoothing out my cash flow, what other benefits are there to medical receivables funding?  Access to unlimited working capital improves the credit rating of the provider.  Practice creditors may offer cash discounts for early payments, sometimes up to 25%.  The provider's balance sheet improves making the practice more attractive for buy-out or acquisition.  Capital is available to reliably meet payroll and malpractice premiums.  Funds can be easily drawn to cover practice expansion, adding partners or purchasing/leasing new equipment. 

Do I need to generate a certain level of monthly receivables to qualify for medical receivables funding? No!  However, there are many different programs with different funding sources with their own criteria for whom they will and will not fund, based partly on net monthly receivable levels.  It is our job and duty to find you the best program and funding source to meet your individual needs.

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2.     Factoring Receivables

Does my business need good credit to factor? Businesses do not have to have an outstanding credit history to factor. Instead, A funder primarily analyzes the customer's credit. This means funders look at the credit-worthiness of its clients' customers and their ability to pay. This is beneficial to new companies that do not have an established credit history to secure loans or other financing.

Do other businesses use factoring? Although factoring is not common knowledge to all businesses, it is often used in the business world. Many companies, including Fortune 500 companies, such as Applied Materials, Bethlehem Steel, Coca-Cola, Xerox, and Lucent Technologies use factoring as a form of financing.

How can my business benefit from factoring?

  1. Focus on business operations instead of cash flow concerns
  2. Increase production and sales 
  3. Take advantage of trade discounts, or those discounts offered by suppliers for early payment 
  4. Meet payroll or payroll taxes 
  5. Finance expansion without debt 
  6. Fund marketing or e-commerce projects 
  7. Payoff outstanding debt 
  8. Improve credit rating with timely payments 
  9. Improve balance sheet by increasing cash and decreasing A/R 
  10. Eliminate need for outside investment, such as loans, credit cards
  11. Position business for outside investment, such as bank financing or SBA loans

Is factoring more expensive than other sources of financing? Utilized in an efficient way, factoring can be quite cost-effective. Here are some options:

1.      Knowing the typical payback period of customers will allow a business to factor an invoice at the right time along its cycle, and thus reduce the cost to that business. For example, if a customer usually pays on the 40th day, a business might want to factor the invoice on the 20th day to limit the fees charged.

2.      With the funds it receives from factoring, a business can take advantage of early payment discounts offered by their suppliers. For example, a business might be able to save 3% from its supplier if it uses factored money to payoff debt within 15 days.

3.      With more working capital, businesses have the capability to purchase higher volumes of supplies, thus making them eligible for volume discounts from suppliers.

4.      A business can stop offering its customers early payment discounts since it receives its funds immediately from factoring.

5.      A business could increase its prices to offset any fees incurred from factoring. It could also increase its prices by a percentage and offer an early payment discount at the same percentage to those customers who pay within a given period. This way, timely paying customers would pay the original prices, while late paying customers would offset any factoring fees.

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3.     Notes

Can you provide help in structuring Notes?  Yes, we can help structure notes for sellers before the property is sold to assure maximum price and with minimal discount.

Why would someone want to sell their note? There are many reasons why someone would want a lump sum payment on their note.

   1.      Current enjoyment
   2.      To pay off debts
   3.      To fund college costs
   4.      Other investment opportunities
   5.      Major purchases
   6.      To pay taxes
   7.      Simply tired of collecting payments

What is the advantage to selling a note? Economic factors like inflation and the rising cost of living make money in the future worth less than money today. Today the value of your note(s) will depend on several factors:

           1.      The collateral securing the note (if any)
           2.      Number of remaining payments
           3.      Interest rate (if any)
           4.      Credit worthiness of the party making payments to you.

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