Spread of Late Payments and Its Effects on the Economy

The worldwide web of businesses depends on each entity’s ability and desire to uphold agreements. It is accepted as universally true that each party must pay for services rendered, or render services for timely payment.

We can only wish that it would be that simple. When businesses are unable to pay off invoices on time on a widespread basis, what results is what Wall Street Journal reporter Emily Maltby has called, “a cash-crunch contagion.” One company’s inability to pay another leads to the second business’ inability to pay those it is in debt to, and so on until delinquency spreads like wildfire, becoming a national affliction with international consequences.

Of course, the causes for delinquency will come as no surprise to business owners:

  • Slow consumer activity
  • Constricted capital markets
  • General economic pessimism and uncertainty

All of these factors have made it very difficult for businesses to make good on both their receivables and payables. In this sense, delinquent receivables are at the core of the financial crisis. They affect small businesses and their abilities’ to provide quality services, in turn affecting consumers negatively. Delinquent receivables lower credit ratings nationwide and only worsen banks’ already timid lending policies.

The solution? Small business owners can and should factor their receivables, and get your cash instantly. If the customer has decent credit, there is no reason why a business owner should have to wait a long time to get paid.

Click here to learn more about small business factoring.

Spike in Small Business Lending Beckons Economic Growth Ahead

Good news for small business factoring customers in every industry: Just this May, small business lending rose to its highest level of the year so far, likely indicating a wave of economic growth in the coming year.
Thomson Reuters, in conjunction with PayNet, put out their Small Business Lending Index. Their measurement is critical for several reasons:

  1. It rose significantly to 108.4 from April’s 96.6, a sudden gain that reversed a steady decline from the previous four months.
  2. Part of the spike in the Small Business Lending Index was the result of an 18 percent jump in small business lending from May of 2011.
  3. Finally, the small business borrowing index has long been an indicator of economic growth.

U.S. Federal Reserve officials have already slashed the costs of lending as a result of this increase. According to Reuters, these rates will stay right around zero until 2014 at the very least. What remains to be seen is whether or not more stimulus capital will be needed to sustain the growth that small business lending has enjoyed as of late.

Our factoring blog  readers should take note of PayNet’s findings, especially in their measurements of the recent decline in delinquent accounts receivable:

  • The percentage of accounts receivable that were delinquent in payment by 30 days or more fell from 1.28% in April to 1.18% the following month.
  • Accounts delinquent by 90 days or more fell from .34% to 0.29%.
  • Accounts that were overdue by 180 days or more decreased from 0.44% to .40%.

This is all good news for all business owners, as they will be likelier to receive cash from customers at a faster rate than in previous months.

Temp Staffing Industry Adds a Third of June’s Jobs

It has been a banner month for the temporary staffing industry. Staffers led U.S. employment growth in June by adding more than 25,000 jobs to the American workforce. About a third of American jobs created in June were in staffing, according to the American Staffing Asssociation’s July 6th  edition of Staffing Today.

According to Richard Wahlquist, president and CEO of the American Staffing Association “Businesses continue to be very cautious about hiring in the current uncertain economic environment.” Mr. Wahlquist believes this is good news, reminding job seekers “that staffing firms offer immediate employment as well as opportunities for permanent placement.”

This is good news not only for our healthcare staffing factoring readers, but it’s interesting news for our manufacturing staffing factoring readers as well as our entire temporary staffing payroll funding clientele.

Keep in mind that the job growth is actually good news for Americans everywhere. The rise of staffing is a key indicator of the rise of employment across the board. Even though the rate of monthly job creation has fallen from the First Quarter to the Second, more growth is on the horizon for the remainder of the year.

How Corporate Cash Hoarding Affects Your Receivables

In his article on corporate cash hoarding, Wall Street Journal reporter, John Bussey, asks his readers to “Blame Fear, Not Greed, as Firms Hoard Cash.” Bussey addresses a key problem that directly concerns small business factoring clientele across all industries. Bussey imagines cash-hoarding as a threatening economic measure “of what global business thinks about our times. It isn’t pretty. And, despite what some suggest, it doesn’t appear to be guided by greed or complacency.”

Standard & Poor’s analyst, Howard Silverblatt, estimates that “industrial companies are sitting atop 70 weeks of net operating cash.” That is equal to one year and five months’ worth of spending money that could potentially be owed to you. Companies’ decisions to hide “extreme excess cash,” Silverblatt says, are “reflecting the uncertainty of the times.”

Their cautious, even fearful, decisions to withhold cash come at two expenses. For one, their interest rates have gone down to “a tiny 0.8%, well below the rate of inflation. Bussey, the author of the article, cites “a political price, too. President Barack Obama, the AFL-CIO and others have admonished companies to spend more to create jobs.”

Most important to our factoring clientele, however, is the implication that corporate fear has for their firms: When companies hoard cash, they pay their bills slower. We at the Factoring Blog suggest taking a page out of the corporate playbook. Whether your business is in need of medical staffing factoring, aerospace staffing factoring, military staffing factoring, healthcare staffing factoring, education temporary staffing factoring, manufacturing invoice factoring, trucking or freight factoring, or any other industry, we would be happy to help you hoard cash of your own.

Staffing factoring can help with both cash flow and savings. Of course, a factor’s primary function is to help you pay off your primary expenses. If your corporate customers are slow to pay, your best choice may be to have a factor buy your account receivables for a nominal fee.

Supreme Court Stuns Nation with Obamacare Decision

The outcome appeared uncertain, but in a 5-4 decision, the Supreme Court ruled the Patient Protection and Affordable Care Act to be constitutional in accordance with U.S. tax laws.

Chief Justice John Roberts opined that the individual mandate, the clause compelling all Americans to own some sort of health insurance, was unconstitutional if the penalty took the form of a fine. Instead, if

Americans decided not to follow the individual mandate, they would be taxed in accordance with the burden that any potential uninsured illnesses might pose to taxpayers.

Though, prior to signing the bill into law in March 2010, the president had vehemently denied the bill to be a tax, his wording was corrected by the court on Thursday June 28, 2012.

Beyond compelling Americans to purchase policies from healthcare insurance companies, the bill also limits insurance companies’ rights to severability. The PPACA holds that no insurance company can terminate coverage because of a person’s pre-existing condition.

Limitations upon the rights of private sector insurance firms are subsequently countered by the bill’s expansion of Medicaid. The federal government has offered to fund the expansion in every state, to the tune of 100% of the cost.

The act, pejoratively known as Obamacare, has a host of pros and cons that will be sure to affect the well-being of each and every American. It is unforeseeable how our small business, healthcare factoring clientele will be affected, but we will keep you posted as new information becomes available.

The Future and Foundations of Medical Transcription

There was an interesting article in For The Record Magazine last month that the medical transcription factoring specialists at PRN Funding wanted to share with our medical transcription readers–Utterly Essential. Keep reading for a brief overview of the article:

Could it be that the old way of doing things is more effective than the new? When it comes to medical transcription, many doctors still stress the benefits of dictation for providing patient care that is at once more personal, nuanced and efficient.

In his 2007 article in Family Practice Management, David E. Trachtenbarg, MD shared that “clicking or typing text multiple times is generally slower than dictating…Using discrete data, it took me 95 seconds to complete 17 clicks for yes-or-no questions, five text boxes that required typing and two drop-down lists. In contrast, it took me 41 seconds to document the same history using dictation.”

Furthermore, Jason Mitchell, MD, was quoted in Utterly Essential as saying that dictation can “capture nuances and subtleties that cannot be communicated strictly through EHR fields.”

While dictation certainly makes relationships between individual patients and doctors more personal, meaningful, and effective; in the grand scheme of data collection, the tape recorder certainly has its shortcomings. Even with burgeoning vocal-recognition technology like Apple’s “Siri,” harvesting, codifying and putting dictated notes to good use is a process that presents many challenges to the health information industry.

After all, EHR has many benefits. Though it has been criticized for turning highly-paid doctors into data-entry clerks, medical practices are experimenting with cost-effective methods of implementing the process.

One method-which is rapidly becoming dated-involves a scribe whose job is to communicate with the physician and record the finer points of the patient’s case. This allows the doctor more time to see more patients.

Though it would seem to make sense to have nurses act as scribes, Jason Mitchell, MD, argues otherwise. Mitchell, who acts as the assistant director of the American Academy of Family Physicians’ Center for Health IT, believes it to be “more cost-effective to bring someone in on a lower pay scale.”

According to For the Record, Mitchell goes on to assert that “as software becomes more developed… the scribe’s role will eventually become obsolete.”

What does this mean for our medical transcription factoring clientele? It means that the future of EHR has to incorporate, in some meaningful way, the efficient, interpersonal process of dictation. Software must be developed that can enter dictation into EHR, codify it for future diagnostic purposes, and save it for the physician’s use.

By improving the process of extracting discrete data from patients’ narratives, the combined forces of dictation and EHR could save lives in both the present and the future, using all of the methods and information from the healthcare industry’s past.

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