Invoice Funding Question – Should Medical Equimpent Companies Factor Their Invoices?

This article was recently published on PRN Funding’s web site, however, we thought the medical equipment business owners who read The Factoring Blog would find it useful. After reading it, please let us know your thoughts!

Securing a line of credit in today’s economy is still a difficult task for most start-up companies and small businesses. Specifically, medical equipment companies that sell to physicians’ offices, medical clinics and other healthcare facilities are struggling to qualify for traditional financing. However, there is a reliable financing option available to medical equipment companies-accounts receivable funding. Not sure if your company would benefit from medical equipment factoring? Ask yourself the following questions to find out…

  1. Do you have a profitable medical equipment business that is sometimes short on cash? If you answered yes, then selling your medical equipment invoices to a factoring firm is definitely an alternative financing option you should consider. In short, medical equipment funding companies specialize in filling cash flow gaps. Specifically, invoice funding companies provide a steady stream of cash flow coming into your business. Therefore, you won’t have to worry about having enough cash on hand to meet day-to-day payment obligations.
  2. Do you provide medical equipment to creditworthy customers, but they require you to wait 30, 60 or even 90 days for payment? If you answered yes, then using a medical equipment funding company would definitely benefit your business. Oftentimes, healthcare providers (physicians’ offices, medical clinics, hospitals and/or nursing homes, etc.) have to wait months to be reimbursed by third-party insurance companies. In an effort to help manage their own cash flow a little better, healthcare providers oftentimes stretch out their payables to their vendors (i.e. medical equipment companies). When you factor your medical equipment receivables, the funder advances cash within 24-48 hours after you issue an invoice, so you no longer have to wait weeks or months for your customers to pay you.
  3. Are you spending too much time tracking and collecting your medical equipment accounts receivable? If you answered yes, then you should consider utilizing an invoice funding company because the account managers at a medical equipment factoring firm will monitor your invoices and collectables for you. Allowing a funding company to manage your invoices frees up your time to focus on what’s important-The day-to-day management and growth of your medical equipment business.
  4. Have you recently missed a growth opportunity because your cash was tied up? If you ever had to turn down a new customer because you didn’t have enough cash on hand to pre-order medical equipment and/or products for a new customer, then once again, you should consider using a medical equipment invoice funding company. As long as your business is generating new and valid invoices, the factoring firm will continue to advance you cash on those invoices. With a constant stream of cash always coming into the business, you will no longer have to pass up on new business opportunities.
  5. Are your receivables available to be collateralized? When looking for any kind of financing, it’s important that your receivables are not already pledged as collateral for another line of credit. If another funding source has already placed a lien on your medical equipment company’s receivables, then it’s as if they already own the rights to your invoices. In other words, if another funder already owns your company’s invoices, then a new factoring firm cannot buy them.

In conclusion, if you are a medical equipment business owner who is considering alternative forms of financing, and you answered yes to any of the above questions, then you should strongly consider invoice factoring as a way to improve your company’s cash flow.

Why Temporary Nurse Staffing Agencies Make Great Candidates For Invoice Funding

PRN Funding’s president, Phil Cohen, recently published an online article entitled: Why Temporary Nurse Staffing Companies Make Great Candidates For Factoring, which re-published. The nurse staffing factoring blogging crew wanted to share the well-written article with our nurse staffing agency owners…

There are two instances when a temporary nurse staffing agency could encounter a bit of a cash flow crisis.  The first is when the agency is just starting out, and the second is when it hits a period of rapid growth.  To a bank looking at a loan application, neither situation is attractive.  On the contrary, to some factors both of these situations might sound very appealing, and this article explains why.

When a nurse staffing business is just starting out, it lacks two vital attributes for a bank to consider it as a good loan candidate.  First of all, a startup staffing company does not have any tangible assets with which to secure a loan.  In fact, the company’s primary asset is its nurse staffing accounts receivables, which unfortunately is not concrete enough for a bank because those can disappear quickly and without notice.  Banks look for assets that are more tangible such as real estate, machinery or equipment—something physical that they can place a lien on wherever it goes so that in the event of default, the bank can still lay claim to and liquidate that collateral.

On the other hand, there are some nurse staffing factoring firms that are willing and able to work with startup nurse staffing companies.  Rather than loaning money, factors provide cash based on the quality and liquidity of a temporary nurse staffing agency’s assets, specifically their accounts receivable.  In the event that a nurse staffing agency was to go out of business, a factor can continue to collect on invoices that were issued previous to their closing up shop.

The second area that could prevent a new nurse staffing agency from obtaining a business loan is that banks provide loans on the basis of a company’s historical financial performance rather than its potential for success.  Temporary nurse staffing companies who are just starting out have no financial history, which is viewed by a bank as just as risky as having a bad one.  Moreover, banks traditionally will not consider loaning money or extending credit to companies who have been in business for fewer than three years because of the high failure rate for new businesses.

Once again, some nurse staffing factoring companies have a different approach to funding new businesses and are not so easily swayed by the fact that they are just opening their doors.  For starters, factors consider the quality of a nurse staffing company’s accounts (the credit-worthiness of their customers and the validity of their invoices) which allow them to provide funding even when the company is new.  Nurse staffing factoring firms see a different picture when investigating the credit-worthiness of their clients’ customers.  As long as the client is staffing nurses in good paying medical facilities, and the factor is comfortable that they will get paid for the invoices that they buy, the actual agency’s credit becomes a minute detail in the grand scheme of things.

As I said previously, another time when nurse staffing agencies find themselves in need of cash is during a rapid growth period.  For example, a temporary staffing company may have landed a contract with the area’s biggest hospital, and they need to hire and staff an additional 20 nurses immediately.  The agency might have enough money to recruit nurses to fill the demand, but it might not have enough readily available cash to pay their nurses once they have completed their shifts.  This situation is quite common in the nurse staffing world because business owners are expected to invoice and make payroll on a weekly basis while the medical facilities they staff regularly can take up to three months to pay for those shifts.

Now let’s analyze this situation from a banker’s perspective.  Banks consider a company’s ability to repay a loan based on its historic earnings cash flow.  Unfortunately for our growing temporary staffing company, its previous income and cash flow is much smaller in comparison to its increasing need for financing. Sometimes a nurse staffing company’s previous year’s income is enough to secure a bank loan, that is to say, if the staffing agency wanted to stay at its same operating size.  More often than not, a staffing company goes to a bank looking for a larger loan than what last year’s earnings could justify because they intend to use the loan to double or triple last year’s revenues.  Unfortunately, a bank wouldn’t feel comfortable loaning money to a company based solely on its potential to grow.  Once again, banks look at the agency’s profitable operating history to justify lending.  So the bank lending process eventually turns into a never-ending cycle—the nurse staffing company needs money to grow, but the bank needs to see a history of growth to give out money.

Enter a nurse staffing factor.  Though a factor will look into a growing nurse staffing business’s operating history, it’s not a deal killer if the company doesn’t have a track record of high earnings because a factor is generally more concerned with the future of the business.  A good rule of thumb to remember: banks look to a company’s past to justify approving a loan, while factors look at a company’s future growth potential to justify advancing cash on their invoices.  Going back to our example, the fact that the nurse staffing agency just signed a contract with one of the biggest and fastest paying hospitals in the area means nothing to a bank, but it is great news for a nurse staffing factoring firm.

I hope that the invoice factoring information that I’ve shared with you in this article have helped you realize how hard it is for a new or growing nurse staffing company to be approved for a bank loan.  Fortunately, there is another good alternative business financing option—nurse staffing invoice factoring. Selling their invoices to a nurse staffing factoring firm is a much more lucrative option for agencies who are just opening their doors or who are going through a period of rapid growth.

Review of 2011 AAPC Medical Coding Conference

PRN Funding’s medical coding factoring specialists did not exhibit at the 2011 AAPC, so we didn’t have a chance to review the show. However, there was an interesting review by Bonnie Shrek on the Coder’s Voice Blog. Here’s what Bonnie had to say:

The 2011 AAPC National Conference in Long Beach, California proved to be a great success. The 1700+ conference attendees experienced educational sessions, networking opportunities, and the presentation of vendor products, walking away with a plethora of information to assist in working more efficiently and effectively in their professions. The weather proved to be typical spring California weather. In between and after classes, attendees were able to enjoy the sun and see a glimpse of the Long Beach Grand Prix press day, circling the conference center in fast and sporty race cars.

Beginning on Sunday, April 3, classes such as Legal Trends and Issues, Getting to Know Your Local Chapter and the Conference Welcome – Code Watch by National Advisory Board President Terry Leone, were available to get to know information on legal matters in the workplace and who was involved in the AAPC local chapters. Later that evening, Contexo Media sponsored a Happy Hour at The Auld Dubliner across the street from the conference center for all conference attendees. This was a chance for attendees to mingle with other coders to get to know one another by networking and a chance to get to know Contexo Media employees in a relaxed environment.

On Monday, the keynote presentation by Fred Schafer was inspirational and humorous, allowing the audience to get out of their seats and get their blood going by moving with him. The breakout sessions for that day included such sessions as Straight-Up Radiology Coding, EMR Documentation Challenges and Cardiac Catheterization Coding.

On Tuesday, the day started with a general session from Deborah Grider – President and CEO of the AAPC – on how ICD-10 Will Change Everything. During this session, Ms. Grider spoke of the immense changes to specialties such as orthopedics and obstetrics, some of the changes in specific chapters of ICD-10-CM, and how all of the changes will dramatically affect physician practices and hospitals alike. Sessions included High Risk Pregnancy, Meaningful Use Certification, and the Anatomy Expo, presented by specialty physicians, which proved to be fun and informative, leaning about the anatomy, diseases, and disease processes and some of the related procedures of each specialty. The member appreciation lunch announced the 100,000 member of the AAPC as the Coder of the Year, along with the Networker of the Year.

On Wednesday, the last day of the conference, in addition to the general session presented by David Connolly, JD, the AAPC’s National Advisory Board president Terry Leone passed his responsibility on to Cynthia Stewart – the new AAPC National Advisory Board President – who shared her vision of the future. Sessions included Advanced Surgical Auditing and Maternity Care – Conception to Post Partum, wrapping up what was a hugely successful conference in Long Beach, California.

Small Business Owners Still Waiting for Recovery

According to Discover’s Financial’s (DFA) Business Watch, some small business owners have yet to see the recovery that some experts claim will occur this year. In fact, some entrepreneurs view the economy as worsening, and the climate for their companies has declined over the past two months. As an aside, Discover Business Watch measures the relative economic confidence of U.S. small-business owners with fewer than five employees.

Here are some more interesting pieces of information taken from the most recent survey:

  1. More than half of the survey’s respondents rated the economy as still in “poor” condition for the 19th consecutive month.
  2. Nearly 1/3 of small business owners told DFS that they have contemplated going out of business sometime during the last two months.
  3. More than 3/4 of the respondents said that rising fuel prices have affected profitability.
  4. Ironically, 52% of business owners reported no temporary cash flow issues affecting their ability to pay their bills on time, which is up from 46% last month.
  5. And 29% of entrepreneurs intend to increase spending on business development within the next six months.

Click here to read the entire article on

Medical Scribes Role in Transcription Industry

The medical transcription invoice funding specialists recently stumbled upon an “Open Letter Series” written by AHDI’s 2011 Director, Kristen Hagen, discussing the role of medical scribes in the healthcare documentation industry.

Even though, Ms. Hagen wrote the Let’s Talk About…Medical Scribes Open Letter in February, the information within it is still very relevant for our medical transcription factoring blog readers. Here are some tidbits of information we wanted to highlight:

What is the background of a medical scribe?
“Today scribes are commonly referred to as Clinical Information Managers. The primary function of a scribe is the creation and maintenance of the patient’s medical record, which is created under the supervision of the attending physician. The scribe documents the patient’s history and story through direct observation of the physician’s interaction with the patient as well as the procedures performed, the results of the laboratory studies, and the other ancillary information gathered at the point of care…The demand has traditionally been filled with eager pre-medical students, learning first-hand about the workflow patterns and patient care they will deliver in the future.”

What are the skill set requirements and training required to become a medical scribe?
“Medical scribes may be trained on site or through affordable online distance education programs. Skill sets include strong English grammar, a compelling interest in healthcare and  patient improvement, a strong desire to work in a clinical setting, superior analytical and resource skills, understanding and training in enabling technologies…an understanding of information workflow, attention to detail, keen listening skills, and strong multi-tasking abilities…Scribes are also expected to be well-versed in HIPAA and regulatory compliance, and like MTs, scribes have a steep learning curve, with clinical shadowing required in the post training phase.”

Could this be a stepping stone for medical transcriptionists and others in the medical transcription field? Is this an alternate career path for medical transcriptionists?
“There are similarities and distinct differences between medical transcriptionist and medical scribes, as are there in comparing these roles with any other health information management role…Healthcare will need professionals who have flexible resume of contributory skills applicable to an EHR-centric documentation setting. Scribing is a potential alternate documentation setting for medical transcriptionists.”

Ms. Hagen’s two-cents:
“I can tell you that transcribing and scribing are neither competing nor complementary. They are quite unique, with some overlapping fundamental training but with divergent connection to technology and practical application. They are simply two of the many current and evolving roles available for those who seek career in the documentation of healthcare encounters.”

Q: What do you think about the medical scribe industry?

Receivables Exchange Vs Traditional Invoice Factoring

Eric Eagen wrote an interesting post earlier this week identifying some of the differences between the Receivables Exchange program and traditional invoice factoring. The healthcare factoring specialists at PRN Funding thought it was well-executed, however, we thought it might be helpful to add in some more information in favor of traditional invoice factoring:

Here’s a snip it from Mr. Eagen’s post:

Here are some key differences between the Exchange and factoring:

  1. The Receivables Exchange opens up the sale of receivables to a global community of investors in a real-time auction. Those investors compete to purchase your receivables, lowering your cost of capital. On the Exchange, you have access to many potential capital providers, not just one factoring company.
  2. You have complete control over the terms of your auction. You can set the discount fee and minimum advance amount, as well as the duration of the auction.
  3. You can choose what receivables to sell and when. You can sell one or multiple, and are not bound by the onerous contracts or minimums that come with invoice factoring.
  4. There are no personal guarantees or all-asset liens.
  5. And one more major difference: you are not required to notify your customers that their receivables are for sale. You control your valuable customer relationships.

Here are some of PRN Funding’s responses in favor of traditional invoice factoring:

  1. One could easily argue that thanks to the Internet, business owners always have access to many potential capital providers, not just one factoring company. Simply searching “factoring companies” on Google pulls back more than 1.5 million search results.
  2. When comparing and contrasting traditional factoring firms, entrepreneurs still have a say when it comes to choosing their terms. For example, if they’re only interested in working with a factor who advances 80 percent of the invoice or more, then they can choose to pass up on the factors who do not advance over 80 percent.
  3. Traditional factoring firms comes in all different shapes and sizes, and their funding programs vary across the board. For example, with PRN Funding’s healthcare factoring program, business owners have the ability to choose which invoices to sell, and we do not have any minimums or maximums.
  4. Once again, not all traditional factoring firms will require a personal guarantee or an all-asset liens. PRN Funding only requires a validity guarantee, and we’re able to file liens that are not all-assets.
  5. Finally, there are factoring firms that operate under a non-notification model, whereas a business owner’s customers are not notified that the receivables have been sold.

Of course, when comparing and contrasting working with the Receivables Exchange or with a traditional factoring firm, there are advantages and disadvantages for both. It’s entirely up to the business owner to decided how he/she wishes to proceed.

Gearing up for 17th Annual Factoring Conference

The World’s Largest Receivable Finance Conference is set to be the largest conference yet. Will you be there?

The International Factoring Association’s (IFA) 17th Annual Factoring Conference is set for April 13-16 at the Omni Shoreham Hotel in Washington DC.

There is a jam-packed schedule of exciting and entertaining speakers. Here is a list of just a few of the topics that will be covered:

  • Forecasts for the Future from the Federal Reserve Bank presented by Elizabeth A. Duke, Board of Governors, Federal Reserve System
  • How Technology will affect Business & Finance in the Coming 20 Years presented by Dr. Michio Kaku, Physicist / Futurist
  • Due Diligence Issues presented by Mike Ullman, Esq., Attorney, Ullman & Ullman, PA
  • IRS and Tax Lien Issues presented by Jason Peckham, Esq., Director of Business Development, Tax Guard
  • Current Topics in Transportation Factoring presented by David Jencks, Esq., Attorney, Jencks & Jencks

There are also a lot of fun and exciting events scheduled during the conference, such as a Golf Tournament, multiple receptions and socials. However, the healthcare factoring experts at PRN Funding are most excited about Factoring Jeopardy because the President of PRN Funding, LLC, Phil Cohen will be hosting the highly anticipated game show.

In the IFA’s version of Factoring Jeopardy, contestants will be given the opportunity to pit their accounts receivable factoring knowledge against other players and win valuable gifts and prizes. All categories and questions will be from the field of invoice factoring.

Click here for more info on the 17th Annual Factoring Conference.

How Medical Billing Companies Can Increase Their Cash Flow through Factoring

While the public’s confidence on the economy continues to spiral downward, the demand for health care in this country continues to grow.  According to the National Coalition on Health Care, the U.S. spent approximately 17% of its GDP in 2008 on health care costs.  That percentage is expected to jump to 20% by 2017.

Doctors’ offices will soon be flooded by 78 million baby boomers as they become eligible for retirement.  To handle this sudden influx, physicians will have little time for the day-to-day business operations of their practices and must focus primarily on patient care.  As a result, medical billing companies are seeing increased demand for their services.

More and more doctors are outsourcing services such as medical billing and coding to subcontractors, and these companies are reaping the benefits.  However, due to the slow pace at which insurance companies approve patient claims, it takes a while for doctors to be paid, and in turn it takes even longer for them to pay their vendors, especially medical billing companies.  According to the American Medical Billing Association, it takes an average of 90 days for paper claims to be reimbursed.  Granted the advent of an electronic claims system has lowered reimbursement times, it is still problematic for medical billing companies to wait to be paid.

For example, an insured patient goes in to see a doctor.  The cost of the visit is $100.  Because the patient is covered for this visit, the doctor must make a claim to the insurance company and wait an indefinite amount of time for the claim to be approved.  If the claim is not approved, the doctor must send more details of the visit.  This increased lag creates a problem for doctors who would rather spend their time with patients than following up on claims.  Therefore, doctors turn to experts and subcontract medical billing companies to handle these issues.

Whether they are start-ups trying to gain a market share of this ever-increasing business, or a veteran company trying to beat the slow-payments system of insurance companies and doctors, a viable and flexible option exists for companies called medical billing factoring.

Medical billing factoring is converting the accounts receivable of a business into cash by selling outstanding invoices to a ‘factor’ for a discount.  Accounts receivable factoring gives the medical billing business immediate access to cash so that it can manage its operations more efficiently.

Instead of waiting months to be paid by doctors’ offices, medical billing companies can use factoring services to get cash now to pay for their employees and ongoing business expenses.  They can also use the money to expand their businesses, such as hiring and training new employees or purchasing new equipment, in a time when the healthcare industry demands these companies more than ever.

Doctors need all the time they can get to provide care for their increased number of patients. While the amount of work has increased and the payments remain slow, outsourcing medical billing duties gives doctors more time with patients.  By factoring their receivables, medical billing companies do not have to wait to be paid and can continue expanding their businesses in a market that is favorable towards this niche.

NOTE: This was originally written for PRN Funding’s web site, and a re-print addition also appears on