Busting Healthcare Factoring Myths

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.

Freedom from Factoring Fees

In an effort to combat the affects of the crumbling economy, service-oriented businesses have been getting creative with new ways to generate money.

Unfortunately for consumers, that creativity often translates into price hikes, additional fees, reduced services or cut backs on productivity. But does it have to be that way?

Take a look at the airline industry. When fuel prices soared last summer, airline giants started charging extra for what were once common courtesy services in addition to the original ticket price. They started with charging for snacks and drinks and then quickly moved onto charging checked bag fees, assigned seat fees, fuel surcharges, curbside check-in fees, etc.

Once the industry giants established that this additional fee policy was going to be part of the standard flight-booking procedures, it didn’t take long for all of the airlines to jump on the “Hidden Fee Bandwagon.” From a customer’s perspective, it seemed as though the airline industry as a whole started seeing dollar signs instead of thinking about its customers needs. Then along came Southwest Airlines with its clear thinking and its “No Fee Policy.”

In some ways, the accounts receivable factoring industry can appear to be a lot like the airlines industry. Both operate world-wide, both industries should be service-oriented, and both industries are notorious for tacking on extra fees in addition to the basic fee. Much like Southwest Airlines, the factoring industry has a handful of healthcare factoring companies who do not charge extra fees in addition to the base fee. This article will discuss three areas where factoring firms might insert hidden fees.

First and foremost, a business owner needs to understand the basics of how a factor charges for its factoring services. It’s important to note that healthcare factoring firms do not loan money; rather, they purchase a company’s invoices at a discounted rate. This discount rate can be a one-time flat fee, or it can vary depending on how long the factor owns the invoice.

In general, discount rates can be affected by a number of things, including the contractual commitment, the average monthly purchase volumes, the average size of the invoices sold, the number of account debtors (customers) that will be factored and the credit quality of those debtors. Variations in each of these will lead to potentially substantial changes in the fee structure. In many cases, factoring firms will have extra fees in addition to their factoring discount fee. More often than not, these “hidden fees” are disguised as set-up fees, administrative fees and penalty fees.

Set-up Fees
There are some factoring companies that start charging fees as soon as a potential client applies for healthcare factoring services. Set-up fees range from a minimal application fee of $25 to a hefty origination fee of $500. In some cases, factors will add in individual fees for due diligence procedures (i.e. running credit and background checks) and legal documentation fees (i.e. assembling legal documents and filing liens). When all is said and done, a new factoring prospect could be $1,000 out of pocket before knowing if he/she has been approved for funding.

When business owners are comparing and contrasting factoring companies, it’s important to inquire whether the factor charges specific set-up fees. Sometimes, the factor will say yes, and sometimes it will say no. It’s up to the business owner to decide whether or not the factoring services outweigh the start-up costs before moving forward.

Administrative Fees
In addition to application, origination and due diligence fees, some factoring firms charge their clients for the time it takes to compile and ship legal documents, billing for postage, long-distance phone calls, photocopying documents and/or time spent on the computer while assisting their clients. There are also fees associated with funding procedures. Most factors will institute set prices for a same-day wire or an overnight transfer of funds.

When a business owner is contemplating the notion of factoring his/her receivables, it’s important to factor any administrative costs into the equation. Without doing so, a business owner could wind up paying a lot more than he/she had initially anticipated.

Penalty Fees
The last way a factoring firm could potentially squeeze in some additional “hidden fees” is when it assigns fees for various “penalties.” Under this umbrella of penalty fees, a factoring firm could designate fees for misdirected payments, early termination of a contract, aged invoices, expedited funding (within 24 hours or less), not hitting a monthly minimum factoring requirement or going over the maximum allowable factoring amount. In addition, a healthcare factoring firm could also penalize its client by holding onto the funds within the reserve account (cash that is owed back to the client once payments have been received).

When choosing an accounts receivable factoring company, business owners should take the time to read all of the terms and conditions before signing on the dotted line. Entrepreneurs should not be afraid to dig deep into the factoring contract and ask a question when something is unclear. Otherwise, those hidden fees hidden fees will reveal themselves at a point where it’s too late to re-negotiate the terms.

So in conclusion, it does appear that the factoring industry is similar to the airlines industry in that players in both are notorious for charging “extra fees.” The plus side to this realization, however, is that both industries also have some players who stand firm in their “No Extra Fee Policy.” The bottom line-much like when shopping for the best airline deal, it’s extremely important to look at the all-inclusive price, including possibly extra fees, before agreeing to do business with an accounts receivable factoring company.

**NOTE: This article is a re-printed version of what was originally written for and published on eZineArticles.com as well as FactoringInvestor.com.

Phil Cohen Interview Courtesy of Factoring Investor

Awhile back, the owner of PRN Funding, LLC, Philip Cohen, was interviewed and featured on Factoring Investor’s web site. Check out a portion of the interview below:

Factoring account receivables is helping health care companies through these tough economic conditions opening the door to earning opportunities for cash flow consultants. FactoringInvestor (FI) caught up with Phil Cohen, Founder and President of PRN Funding, LLC, to fill us in on the specialized niche of healthcare funding.

FI: What transactions will your company consider funding?

PRN: PRN Funding, LLC has a very specific niche in healthcare funding. We provide factoring to vendors who sell goods or provide services to medical facilities. Moreover, our client base consists of medical staffing agencies, private duty home care agencies, medical transcription services, medical billing and medical coding companies and medical supply companies.

FI: How did you get your start in the factoring business?Phil-Cohen-Photo

PRN: Prior to founding PRN Funding, LLC, I spent the better part of a decade acquiring medical transcription firms as a national roll-up strategy. During this time, I noticed a trend. Many of the medical transcription services were well-run firms; however, they were selling their companies because of cash flow problems. Seeing this cash flow problem, I was able to identify an opportunity to help them – accounts receivable factoring. Over time, I’ve been able to expand into other healthcare vendor niches, including medical staffing, medical coding, medical billing and medical supplies.

FI: What unique benefits does your company provide?

Industry Expertise: PRN Funding, LLC understands the unique characteristics of the healthcare vendor industry. We are very familiar with traditional payment terms, industry jargon and day-to-day procedures associated with the healthcare vendor industry.

Extreme Flexibility: PRN Funding offers the utmost in flexibility to vendors who sell goods or provide services to healthcare facilities. Our clients choose when, who, how much and how long to factor their invoices.

No Hidden Fees: PRN Funding does not charge the following:

  • Application Fee
  • Origination Fee
  • Due diligence Fee
  • Legal and documentation Fee
  • Administrative Fee
  • Early Termination Fee

FI: What do you consider the best methods for finding deals?

PRN: Aside from our web site, PRN Funding relies very heavily on our brokers and cash flow consultants to refer us deals.

FI: How do you handle commissions to brokers or consultants?

PRN: We pay our brokers 10% of the fees we make for the life of the deal.

FI: What advice would you give to new professionals just starting out in the industry?

PRN: Now is a great time to get into the cash flow industry. Traditionally, small business owners relied heavily on credit cards to fund their business operations when they were not eligible for bank financing. The current economic situation has recently prompted many credit card companies to drastically reduce credit lines and raise interest rates for their customers who use small business credit cards. As a result, these business owners are in desperate need of a new alternative financing method to fund their business, and cash flow consultants have all of the tools to match those business owners with the appropriate funder.

FI: What is the most common business mistake you see people make?

PRN: The most common business mistake I see brokers make is that they present a lead to us without pre-qualifying it beforehand. It’s important for a broker to accurately assess a prospect’s need for funding and then match it with a funder who understands the prospect’s business model.

FI: Given the current economy, have you made any changes in the way you transact business?

PRN: In light of the changing economic climate, PRN Funding made the decision to branch out into a brand new healthcare funding niche. We formally launched PRN Funding’s home care factoring program in February. We recognized how long it takes for state-funded programs to pay private duty agencies, and we wanted to address the dilemma by offering these companies a factoring solution.

In addition, although there are more business owners applying for factoring as a result of the economic crisis, the quality of some of those applicants has gone down. Therefore, PRN Funding has had to tighten up on our due diligence process. Things that we may have been lenient on in the past, we are no longer able to do so…

Want to learn more? Click here to read the entire Factoring Investor Interview with Phil Cohen.

Thoughts on 2011 NPDA Annual Leadership Conference

PRN Funding had the opportunity to exhibit at the National Private Duty Association’s Annual Leadership Conference at Planet Hollywood Casino in Las Vegas last week. Although we were pleased with both the quantity and the quality of the attendees, we left the home care trade show disappointed for a number of reasons. Sadly, the majority of the reasons why we were disappointed with the show had to do with NPDA’s poor customer service:

  • PRN Funding was assigned to Booth #20 months prior to the show, however, a couple of weeks before shipping out, we were told that we were going to be in a different booth. NPDA did address this, however, the miscommunication created a bit of panic on our end, as we had already sent out marketing details about our booth number prior to the change.
  • Booth set-up times and exhibit hall open and close times also changed a number of times prior to the actual show.
  • The show decorator’s (LV Expo) package arrived late, and they initially missed our scheduled pick-up time.
  • When we did our pre-conference email blast to the NPDA show attendee’s, one of the attendees emailed us back and said that they were displeased that we were marketing to them because they never gave permission to receive emails from exhibitors. (NOTE: PRN Funding received the permission-based attendee list directly from NPDA.)
  • When PRN Funding’s crew arrived to set up the booth, the dimensions of the booth space were incorrect.
  • There were a couple of times when the presenters went over their alloted time to speak, which cut into exhibit hall time.
  • Once at the show, the exhibit hall open/close times changed again within a couple of hours notice in order for the show decorator to set up for cocktail hour.
  • During cocktail hour, there were dueling pianos in the exhibit hall, which was a nice Vegas touch, however, it made it nearly impossible for exhibitors and attendees to interect on the floor because it was so loud.

On the plus side, the attendees were bright, professional and engaged. They approached PRN Funding’s booth, wanting to learn more about our home care factoring services, and we had a number of enthusiastic conversations.

Q: Did you attend/exhibit at the 2011 NPDA Annual Leadership Conference? If so, what were your thoughts? We’re interested to see attendees viewpoints of the show.

Home Care Factoring Firm Invited to Exhibit at NPDA Conference

PRN Funding, LLC, an accounts receivable factor with funding niches in the private duty and home care industries issued a press release yesterday announcing that they will be exhibiting at the 2011 NPDA Conference next month. We’ve posted the official press release below:

Last year, PRN Funding, LLC exhibited for the first time at the National Private Duty Association’s Conference in Philadelphia. Because of the trade show’s successes, home care factoring specialists from PRN Funding plan to travel to Las Vegas to exhibit at the 2011 Conference in March.

President, Phil Cohen, and Account Manager, Joanna Schafer, will be in booth #20 March 2-4 and available to speak with home care business owners about how they can turn their Medicaid receivables into cash immediately through home care invoice factoring.

With years of experience in healthcare industry, PRN Funding has a precise understanding of the unique challenges within the private duty and home care industries. PRN Funding offers financial resources to these companies by purchasing their accounts receivable–a process known as ‘factoring’, which provides the cash needed to sustain and grow a healthcare business.

Jan 2011 – PRN Funding’s Recent Factoring Transactions

PRN Funding offers financing services to healthcare vendors. Most notable, PRN Funding offers healthcare staffing payroll funding, medical transcription invoice funding, medical coding factoring and medical billing AR funding. Most recently, PRN Funding also provides private duty home care factoring agencies.  By purchasing these companies’ accounts receivables, PRN Funding provides the cash needed for them to sustain and grow their healthcare business.  With that said, we are pleased to announce some of our most recent factoring transactions:

A Nurse Staffing Agency Finally Gets Approved for AR Financing
In an attempt to get her company started, this Illinois nurse staffing agency owner borrowed from friends and family, maxed out all of her credit cards and fell behind on her bills. Naturally, her poor personal credit was greatly hindering her ability to obtain ongoing business financing from a traditional lender.

Frustrated from being turned down, the nurse staffing agency owner started researching alternative financing options and came across PRN Funding’s nurse staffing invoice funding web site. Through her research, she learned that PRN Funding based its credit decision on her customers’ creditworthiness, rather than her own. The agency owner applied online that day and after hearing ‘no’ for so long, she was finally approved for a line of credit.

An Allied Health Staffing Agency Works with Long-Term Care Facilities
Two business partners from Louisiana knew that in order for them to start a successful medical staffing agency in a down economy, they would have to focus a specialized staffing niche. So instead of placing RNs, LPNs and CNAs, they chose to focus on providing various types of therapists to help fill gaps exclusively at long-term care facilities. Within two months of opening their doors, the savvy business partners had more shifts to fill than therapists. However, they couldn’t hire additional therapists because their cash flow was continuously held up by slow payments from the long-term care facilities.

The business partners were familiar with factoring, and they knew that most general factors wouldn’t be comfortable purchasing receivables that could consistently age out past 90 days. Luckily, a friend of one of the partners suggested they approach PRN Funding because it was a factoring firm that specialized in allied health factoring. The business partners called in on a Friday, received documents the next day, and factored their very first allied health invoice by the end of the week. Having a better cash flow allowed them to bring on three new therapists that month, and they haven’t had to turn down new business since.

Tennessee Business Owner Uses Medical Coding Invoice Factoring to Improve Cash Flow
When this entrepreneur first started her medical coding business, she coded exclusively for one physician. Over the years, the business owner’s outsourced medical coding services expanded steadily. She gradually started hiring new coders and while simultaneously adding multiple doctors to her portfolio.  Then the economy turned south, and with it, the business owner’s receivables started coming in slower.

At first, the medical coding entrepreneur tried to make up for the lack of cash flow by paying her own bills with credit cards, and paying the coders out of her own pocket. It didn’t take long before her credit cards were maxed and her savings account had dwindled. While flipping through an industry magazine, she found an ad for PRN Funding’s medical coding factoring services. According to the ad, PRN Funding’s factoring services could help her get paid quicker, so she dialed the toll-free number and was connected to a medical coding factoring specialist immediately. Two weeks later, she submitted her first medical coding invoice for factoring, and she worried less about her company’s cash flow.

Click here for more information on PRN Funding’s accounts receivable factoring services.

Health.com’s Top 10 Careers with High Rates of Depression

Health.com recently released the results of a study that ranked personal care providers as having the number one career that’s linked to bouts of depression. Nearly 11 percent of the people working in this field reported a major bout of depression.

Specifically, Health.com posted this about the caregiver career:

A typical day can include feeding, bathing, and caring for others who are “often incapable of expressing gratitude or appreciation…because they are too ill or too young or they just aren’t in the habit of it,” says Christopher Willard, clinical psychologist at Tufts University and author of Child’s Mind.

“It is stressful, seeing people sick and not getting a lot of positive reinforcement.”

Here is the Top 10 list of careers with high rates of depression:

  1. Personal care providers
  2. Food service staff
  3. Social workers
  4. Healthcare workers
  5. Artists, entertainers, and writers
  6. Teachers
  7. Administrative support staff
  8. Maintenance workers and groundskeepers
  9. Financial advisors and accountants
  10. Salespeople

Click here to read the entire article: 10 Careers with High Rates of Depression

Decision Health’s 2010 Private Duty Conference Overview

Last week, PRN Funding exhibited at Decision Health’s 13th Annual Private Duty National Conference and Expo in Las Vegas, NV.

Overall, it was a wonderful conference. Phil Cohen (President of PRN Funding, LLC) and Nikki Flores (Marketing Manager) had the opportunity to speak with a number of  home care agency owners who were interested in using PRN Funding’s private duty factoring services sometime in the future.

PRN Funding is looking forward to exhibiting that Decision Health’s 2011 Private Duty Conference and Expo next year!

PRN Funding Prepped for Decision Health’s Private Duty Conferece

According to a press release issued last week on their site, the private duty factoring firm will be exhibiting again at Health Decision’s Annual Private Duty Conference and Expo next month.

Private duty and home care agency business owners are encouraged to stop by booth #209 to learn more about an alternative financing option, invoice factoring.

NPDA Hires Resolute Consulting to Lead Grassroots Efforts

According to the official press release, The National Private Duty Association (NPDA) recently hired Resolute Consulting to “lead the organization’s efforts to engage relevant legislators and administrators who will impact policies associated with the issue of misclassification of workers.”

NPDA’s executive director, Kim Stoneking, explained in the press release that the organization’s members who play by the rules are placed at a competitive disadvantage when other companies choose to misclassify their workers as independent contractors.

Jim Soreng, senior account executive at Resolute Consulting, outlined three primary goals for the campaign:

  1. Identify and take advantage of legislative opportunities to impact public policy surrounding private duty homecare, particularly as it relates to worker classification.
  2. Take advantage of existing legislative opportunities – or create opportunities – to engage current NPDA members to attract new ones to the organization.
  3. Define NPDA as the primary force in the private duty homecare marketplace advancing the industry’s legislative priorities.

Click here to read the official NPDA press release: NPDA taps Resolute Consulting to lead public policy, grassroots campaign.

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