Do you have a profitable medical staffing agency that is sometimes short on cash? Or are you thinking of starting a medical staffing agency and worried that you won’t have enough money to make payroll? If you answered yes to either of these questions, then you are not alone. Every medical staffing agency owner goes through cash flow challenges. Some find ways to overcome their cash flow problems, and some do not. If you want to be one of the medical staffing business owners that succeed, then you should keep reading.

One of the most frustrating aspects of owning a medical staffing business is that healthcare providers oftentimes insist on extending payments beyond 45 days. In fact, it’s not uncommon for a large medical facility to cut checks 60 days or later after services have been rendered. Naturally, a consistent history of ‘staff now and get paid later’ can wreak havoc for any new or growing medical staffing company. In effect, it causes the agency to be invoice rich and cash poor, which means that a medical staffing agency has a lot of outstanding receivables and little cash in the bank to show for it.

Fortunately, there is an easy way for staffing agency owners to turn their receivables into cash - medical staffing payroll factoring. It’s is one of the most used and least talked about ways to finance a business. In essence, medical staffing payroll factoring is a financing tool that allows medical staffing agency owners to convert their invoices into cash immediately. Specifically, a medical staffing payroll factor purchases an agency’s invoices at a discount and offers an advance payment to the agency. When the invoices come due, the medical staffing payroll factor collects directly from the agency’s clients (account debtors), takes its fees and releases the balance back to the agency. Utilizing medical staffing payroll factoring can transform an invoice rich agency into a cash rich…

Click here to keep reading How Can Medical Staffing Payroll Factoring Help My Agency?

There was another interesting article from HealthLeaders Media that the nurse staffing factoring specialists at PRN Funding felt would be beneficial for our nurse staffing friends to read. Entitled Nurse Staffing Costs Must Be Weighed Against the Cost of Errors, the article author believes that hospital executives need to pay closer attention to studies that show how nurse staffing affects a hospital’s overall performance and base staffing decisions on those findings.

Kathy Douglas, MHA, RN, president of the Institute for Staffing Excellence and Innovation, CNO of API Healthcare, and a board member of the journal Nursing Economic$ was quoted in the article saying: “Staffing costs sit in one part of the budget, so we think of the results there. Then the cost of errors sits in another part of the budget. If I could say one thing to healthcare executives it is to make staffing a top strategic priority in your organization. If you look at top priorities-LOS, safety, quality-all of these things have direct links to staffing.”

Moreover, Douglas gave an example of looking at things from a bigger perspective. She said that some hospitals that have cut back on staffing may not notice that it is overusing overtime and it might not notice that there’s a relationship between the overtime and the number if infections on a unit.

The nurse staffing factoring specialists at PRN Funding came across a piece of research that we believe is important to share with our Nurse Staffing Industry readers.  Due to the perceived credibility of the source of the study it is imperative that any company that provides supplemental medical staffing be aware of the study and prepared to address the underlying issues.

Johns Hopkins University School of Medicine announced new research showing that temporary ER nurses may inadvertently be a threat to the patients they serve. Specifically, the study found that temporary nurses were twice as likely as permanent employed nurses to have medication errors in the hectic and fast-paced emergency room environment.

Although the studyimplicated temporary nurses, the authors stressed that temp ER nurses are not the only ones to blame for these shortcomings. The authors cited various reasons for ER errors, including the fact that many hospitals don’t give temporary nurses the same level of consideration and training as they do for their permanent staff.

Click here to read the official press release: Temporary ER Staff Poses Increased Safety Risk to Patients.

From time to time, the nurse staffing invoice funding specialists at PRN Funding gets asked a question that we think our nurse staffing readers would appreciate hearing about. So today, our nurse staffing factoring staff are answering:

How Important is it for nurse staffing agencies to pay payroll taxes on time?

In short, VERY! Nurse staffing business owners may be able to dodge the bullet for a bit, but not paying your payroll taxes on time will catch up on business owners eventually. When the IRS discovers that a nurse staffing agency owner is behind, the punishment can cost the agency dearly.

The good news is that there are ways to catch up on back taxes. The best way for staffing agencies to stay in good-standing with the IRS is to respond to their calls and letters, and once a re-payment plan in is place, agency owners need to honor their commitments. Demonstrating a willingness to cooperate with the IRS helps nurse staffing agency owners avoid an IRS tax lien on his/her business.

It’s important to note that when a nurse staffing agency has a factoring relationship, the factor will be most likely want to see proof that payroll taxes are being paid. Nurse staffing invoice factoring companies will ask for this proof because the IRS is the only entity who can trump a factor’s lien.

Although invoice factoring is a great alternative funding option for any type of business, it’s an especially good allied health agency financing choice for agencies that staff temporary professionals in hospitals, clinics and nursing homes. In fact, selling invoices to a factor allows allied health staffing agencies to get paid quicker without going into additional debt. Furthermore, agency owners who factor their invoices will have enough liquid capital on hand to make weekly payroll and keep up with payroll tax obligations. Still not convinced? Check out the Three Reasons Why Allied Health Staffing Agencies Should Factor Their Invoices:

Reason #1: Stop Waiting to be Paid.
Instead of waiting 30, 60 or even 90 days to receive payment staffing in allied health professionals at a medical facility, temporary staffing agency owners can sell their invoices to a factor and receive cash within 24 hours of issuing an invoice. All a factoring firm needs to advance cash is a copy of the invoice and proof that the employees worked the shifts listed on the invoice. This is easily accomplished by supplying copies of signed time sheets.

Reason #2: Leverage the Credit of Your Customers.
Allied health staffing  funding is a great option for companies who are either just getting started, have less-than-perfect credit or are going through a growth spurt. Rather than make a credit decision based off of the staffing agency’s credit or the business owner’s personal credit, allied health agency funding firms determine their credit limits after reviewing the payment trends of the agency’s customers. This is usually done by using a third-party credit bureau, and it’s done in a non-intrusive way, giving companies the ability to secure allied health agency financing based off of their customers’ credit rather than their own.

Click here to find out the last reason Why Allied Health Staffing Agencies Should Factor Their Invoices.

Hiring an invoice funding company can be an unnerving process for nurse staffing agency owners because they may be worried about how their customers will view the new financing relationship. It’s a natural concern to have; however, working with a nurse staffing account receivables factoring company doesn’t have to be scary. This article gives three unique responses that agency owners can give to their customers to help explain a new account receivables factoring arrangement.

Nurse Staffing Account Receivables Factoring Response #1:
Invoice factoring is just an alternative form of financing.
As a result of these difficult economic times, traditional lenders (i.e. banks) are not extending new credit lines, and/or they are increasing interest rates. This makes it extremely difficult for a temporary nurse staffing agency to obtain traditional financing. At the same time, the demand for temporary nurses has sky-rocketed.

Savvy staffing agency owners are turning to alternative sources of financing to ensure that their businesses have a positive cash flow. In short, working with a nurse staffing account receivables factoring firm proves that the agency is fiscally sound and prepared to weather the down economy. Moreover, the factoring arrangement will allow my agency to continue to grow without hindering our ability to provide quality nurses to your facility.

Nurse Staffing Account Receivables Factoring Response #2:
Our current nurse staffing relationship will go unchanged.
Even though a factoring company will be managing my staffing agency’s receivables, the business relationship that I have with your medical facility will not change.  We will continue to provide you with excellent nurses and invoice as usual. Should you need one of our supplemental nurses to fill a staffing gap, feel free to contact our agency directly, and we will find a nurse to fill the position.

The only thing that will change on your end is the remittance address, as payments should now be sent directly to the factoring company.

Click here to find out what the third nurse staffing factoring response is.

There is a common misconception that healthcare staffing factoring is a complicated type of financing. In actuality, the factoring process is actually quite simple. All it takes is five easy steps…

Step One: Sell Healthcare Staffing Agency Invoices to a Factor

Technically, the first step in the healthcare staffing factoring equation happens when the agency’s customer (presumably a medical facility) has a shift open and requests the agency to fill that position. Once an agency employee works the shift, the agency is able to invoice the facility for the hours worked. At any time after the agency has invoiced the medical facility, it also has the ability to sell the invoice to a healthcare staffing factor.

The actual sale of the invoice is usually accomplished electronically, in that the agency emails or faxes a copy of the invoice along with corresponding signed timed sheets to the healthcare staffing factoring agency. The invoices and timesheets must be accompanied by an Assignment of Accounts Receivables form, which lists out all the invoices the agency wishes to sell to the factor and includes a signature from an authorized employee of the agency.

Step Two: New Debtor Credit Check

Once the healthcare staffing factoring firm receives the schedule of invoices and timesheets, an account manager reviews it for new customers. If there happens to be new customers (a.k.a. debtors), the account manager will conduct a brief credit review in order to establish a line of credit for that debtor. Typically, the credit review process can be completed within 24 hours of receipt. Once a new debtor has been approved for funding, the account manager will notify the debtor’s accounts payables department that when they receive invoices from the agency, the payment should be remitted directly to the factor.

If there are no new debtors included with the schedule, then the account manager simply moves on to step three of the healthcare staffing factoring process, which involves verifying the submitted invoices.

Want to find out the last three steps? Click here: How Does Healthcare Staffing Factoring Work?

Tracy Z wrote an interesting post on FactoringInvestor.com comparing and contrasting the cost Groupon vs. the cost of invoice factoring.

Rightfully so, Tracy defined the marketing lure of Groupon as “marketing with no upfront fees.” For cash-strapped business owners looking to make more sales, free advertising sounds like a good deal–That is until you break down the numbers:

• 50% discount to customer
• 25% fee to deal provider
• 25% net to business owner

In essence, the business owner only makes 25% AND they have to wait to get their portion, in installments, over time.Tracy outline a simple example, where 1/3 of the business owner’s profits was paid in 5 days, 1/3 in 30 days and the balance within 60 days:

$100,000

-$50,000 discount

-$25,000 fees

=$25,000 received by business owner (33% or $8,333 immediate advance, with the remaining $16,667 paid out over 60 days.)

Then Tracy used the same scenario as though the business owner were factoring:

$100,000

-$5000 factoring fee (average 5%)

=$95,000 received by business owner (80% advance or $ 80,000 upfront, with the balance less the fees received once debtor pays in full).

Pretty interesting comparison, huh?

Click here to read the article Tracy referenced in her post: Why Groupon is Poised for Collapse.

NOTE: This temporary nurse staffing factoring case study can also be found on PRN Funding’s web site.

An Opportunity for Acquisition…
Barry was the office manager of a temporary nurse staffing company for many years when he was approached with a great business opportunity. The owners of the business were ready to retire and offered to sell their medical staffing company to him. The owners wanted to see their business continued, so they hoped that Barry would agree to buy the business and take over the ownership duties. If not, they would have to look to sell to an outsider running the risk of losing what made the agency unique. They felt that Barry was the best fit for managing the business. He would ensure the on-going success of their temporary nurse staffing company. The owners were even willing to work out a purchase plan with Barry so that he could make payments over time rather than all at once, but he would still need to make a significant down payment in order to secure ownership of the nurse staffing business.

Collateral Needed for Investment…
This opportunity was extremely exciting for Barry and he felt that it would be a great career move. He knew the ins-and-outs of the nurse staffing industry and was confident that he would continue to operate profitably. In a few years, with aggressive sales to area hospitals and nursing homes, he would be able to increase profits for the nurse staffing business. Barry only had one concern. He had no idea where he was going to get the money he needed for the down payment. Temporary staffing organizations simply don’t have the type of hard assets banks require as collateral. Also, the sellers were willing to take a note financing most of the business, but in return they would not allow any senior debt on the balance sheet. If he absolutely had to, Barry could guarantee the loan personally, but that was his absolute last option. There had to be another alternative for Barry to secure the working capital that he needed.

Cash Available in the Outstanding Receivables…
Looking over the financials, Barry realized that there was a significant amount of accounts receivable outstanding. The owners had not been aggressive in collecting or managing their accounts receivable. The services had already been provided, the employees had been paid, but the invoices were still outstanding. Barry remembered seeing an advertisement in one of his staffing journals for PRN Funding, LLC, a temporary nurse staffing accounts receivable factoring company that turned receivables into cash immediately. Promptly, he called PRN Funding and spoke to an account specialist for his business cash flow solution.

A Successful Nursing Staffing Company…
Just as the owners of the nurse staffing company were preparing to sell him the business, Barry was able to establish a relationship with PRN Funding. PRN Funding bought the outstanding invoices, even the invoices that had been issued months ago, and provided the temporary staffing business with an immediate cash advance. Barry used the funds from the cash advance to make the down payment on the business. PRN Funding was also able to actively and professionally collect on the outstanding accounts receivable, freeing up more time for Barry to concentrate on operating his business and ensuring the continued success of his nurse staffing company.

Would you like to learn more about how PRN Funding can help your healthcare business? Apply for healthcare factoring now!

There are a lot of rumors that factoring is not an ideal payroll funding solution for healthcare staffing business owners and entrepreneurs.

However, many of those rumors are a result of misinformation and poor staffing factoring research methods.

This article will help debunk some of the more common factoring myths so that staffing business owners can make an educated decision when it comes time to finding the appropriate funding solution for their cash flow problems.

Healthcare Staffing Factoring Myth #1: I’m nervous to factor my healthcare staffing invoices because my customers are not familiar with it.
Reality: Factoring has been around for over 4,000 years. In fact, many big name companies have benefited from it, including: 3M Corporation, Best Buy, American Express Company, Motorola Inc., CVS Corporation, and Foot Locker. In addition, factoring is very prominent in the world of staffing because medical facilities routinely take weeks or months to pay their staffing vendors. In most cases, in order for a staffing business owner to utilize a factoring company, the accounts payable clerk who handles the payables just needs to change the remittance address.

Healthcare Staffing Factoring Myth #2: Invoice Funding is an expensive financing option.
Reality: It’s important to consider the fact that a factoring fee is not the same thing as an annualized interest rate. For example, if a factoring firm charges a staffing agency owner 3% per month, it cannot simply be translated into 36% APR. Rather, a factoring firm’s fees stop the day an invoice is paid. Staffing firms do not typically wait 12 months to receive payment on an invoice, so the fee is not nearly as large as one would perceive it to be.

Healthcare Staffing Factoring Myth #3: Factoring requires a long-term commitment.
Reality: Unlike a bank loan, most factoring companies who work with staffing agencies do not require a fixed-term financing commitment. You choose when, who, how much and how long to factor your invoices.

Healthcare Staffing Factoring Myth #4: With factoring, I will lose control over my accounts.
Reality: Selling staffing invoices makes it easy for business owners to manage their invoices. Most factoring firms offer their clients access to financial reports weekly or daily. In fact, there are many factors who grant access to a secure online reporting system where staffing entrepreneurs can review purchased accounts and collections in real time via a secure Internet connection.

Healthcare Staffing Factoring Myth #5: The hospitals and nursing homes will think my agency has cash flow problems.
Reality: There are many businesses who use factoring and many medical facilities are already familiar with healthcare staffing factoring. Once alerted of the change in remittance address, healthcare facilities simply view the factor as the agency’s new accounts receivable department.

Healthcare Staffing Factoring Myth #6: The hospitals and nursing homes where I staff will be bothered by frequent collection calls.
Reality: A factoring firm will initially contact an agency’s customer to verify that the invoices are valid. If there is a problem and the staffing factor cannot successfully collect on the invoices, the factor will contact the agency owner to discuss the issue.

Healthcare Staffing Factoring Myth #7: The staffing business model is too complicated for a factoring firm to understand.
Reality: There are many accounts receivable factoring firms that are familiar with this intricacies involved with the staffing industry. As a result of their industry expertise, these factoring firms have specialized funding programs specifically geared towards staffing agencies.

Certainly, reviewing these seven common myths will help staffing agency owners who are trying to piece together the facts about invoice factoring. Hopefully, this article has proven that there are two-sides to every story. You can learn more about managing factoring fears, all it takes is a little research to get started!

**NOTE: This article is a re-printed version of what was also published onFactoringInvestor.com.