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Frequently Asked Questions (FAQ)

Select a cash flow from the following list to view a list of frequently asked questions for that income stream:

• Accounts Receivable Funding
• Business Notes / Private Mortgage Notes
• Medical Receivables

Accounts Receivable Funding ("Factoring")

How does accounts receivable funding, or "factoring",  work?
We purchase accounts receivable from a business at a discount. If a business needs cash, but can not afford to wait 30, 60, or 90 days for their customers to pay, then we can help.

What types of businesses can take advantage of accounts receivables funding or "factoring"?
Any business that generates an invoice and delivers a verifiable product and/or service.

Can my business have bad credit or no credit and qualify?
Yes. Funding is based on the credit worthiness of your customer, not your own. Verifying payee credit worthiness is part of the service we provide at no cost to you.

How much will selling my accounts receivables or invoices cost me?
Factoring fees will depend on a variety of items, some of which are: payee terms granted, invoice aging, your gross profit margin, dollar amounts of your invoice, monthly or annual sales, etc.

Do I have to finance a minimum volume of future receivables?
No. You have the option to finance only the invoices you need to meet your cash flow requirements. You can also stop or resume factoring as you desire.

How much of the invoice volume do you advance?
Typically the advance ranges between 70 and 85 percent for first month. In the second month, you receive the current advance and the reserves from the first month's paid invoices.

If I factor an invoice, where does my customer send the payment and who is the payment written to?
The Factor (or funding source) is the collector of the payment, so your customer will send the payment to the funder instead of to you. 

How will my customer know to send the payment to the Factor (or funding source)?
When you open a factoring account, you will send a letter to the customer(s) whose invoices were factored, letting them know they should send invoice payment to the Factor. A subsequent letter will be sent from the Factor verifying the same details.

How should I expect the Factor (or funding source) to interface or communicate with my customer?
The Factor presents themselves as an accounts receivables management service that has just granted your business an unlimited credit line. The Factor has a vested interest in your customer's satisfaction just as you do. They will communicate via phone and letter. A call to verify the existence of the invoice, and a letter instructing them to redirect the factored invoice payment. Should your customer default on payment, the Factor will speak with you about the matter prior to going to your customer.

What if my cash flow does not improve with factoring?
You can terminate the arrangement at the end of the trial period without penalty.


Business Notes / Private Mortgage Notes

Why should I sell my business note or private mortgage note?
To easily convert your business note or private mortgage note, or payment due you over time, into a lump sum of cash to satisfy an immediate need without going into debt.  Some business clients desire cash to pay employees, pay off bills, or expand their business.  Some individuals desire cash to pay off bills, start a new business or take a deserved vacation.

Is selling my business note or private mortgage note legal?
Yes. This is not a new concept. Corporations as well as wealthy individuals have been buying and selling privately held mortgage notes for decades.

Can this work on a new mortgage loan?
Yes. We utilize what is called a "simultaneous close" that will give you cash at closing. Through "temporary owner-financing" you can sell your property even if it's not moving in the primary market.

Is selling my note like getting a loan?
No. This is not a loan. We will simply buy a portion or all of the future payments due to you on your established business note or private real estate note.

If I sell my note, do I have out-of-pocket costs?
In most cases, no. If you do not have a current title policy and appraisal, these costs may apply. However, once we present you with an offer, the dollar amount agreed to is your cash out at closing.

How long does it take to receive the cash?
The process typically takes between two to three weeks. Sometimes even faster.

Should I consult my attorney or accountant?
Feel free to consult anyone that you feel will help you make the best decision for you or your company.

How much can I get for my note?
The current value of any note is generally based on the collateral securing the note (if applicable), the number of remaining payments, the interest rate (if applicable), and the credit worthiness of the party making the payments to you.

What happens if the note payer defaults or is late making payments?
Since this is not a loan, the funding source assumes all risk for what you sell them. So, once you sell the note (or portion) you will have no further liability.


Medical Receivables Funding

If I have been turned down for bank loans, can I still qualify?
Yes. Your credit rating is less important than the rating of your payor (i.e. insurance companies, state and federal government).

Is medical receivables funding like a loan?
No. Unlike a bank loan, medical receivables funding offers a debt-free way to have immediate access to unlimited working capital.

Why haven't I heard about medical receivables funding before now?
Receivables funding or factoring is one of the oldest methods of increasing working capital for businesses. However, it is only recently that health care providers have been given access to this funding.

Do I have to provide collateral?
No. The funding source only requires a security interest in your receivables.

Is it risky turning my receivables over to a funding source to collect?
No. However, many providers had the same concerns initially. But after they have discovered how the funding source is helping them to increase their bottom line, those concerns dissipate. They see that factoring aides the increase of overall claims collected. It also decreases the reimbursement interval and reduces administrative costs. 

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