Alternatives to Bank Loans

In a recent article in The New York Times entitled “When Banks Won’t Lend, There Are Alternatives, Though Often Expensive”, author Ian Mount points out that alternatives to bank loans are on the rise in today’s rocky small business economy. He gives several examples of non-traditional financing options, of which this blog will discuss three: asset-based lending (factoring), lease-back lending, and cash advances.

Asset-Based Lending: Also known as factoring, this options refers to the process by which businesses sell their receivables to a factoring company. They then get 80-90% of the cash back immediately and the rest after customer repayment, less a percentage fee. This option is best for business-to-business companies that cannot wait for payment, and the cost is usually 4-5% monthly with an effective annual interest rate is typically between 18-30%.

Lease-Back: This refers to when a company sells its property, plant, and/or equipment, and simultaneously leases it back for cash. It is best for companies with valuable plant or equipment that are underutilized, and the cost is monthly lease payments plus the depreciation and tax burdens of equipment.

Cash-Advances: Cash advances take place when a company receives an advance sum from a lender and pay them back with percentages of their monthly card receipts until the loan plus a predetermined rate is repaid. This financing method is best for retailers and restaurants with limited financing options, and the cost is usually 20% and up.

All three are viable financing options for companies rejected by banks, or looking for fast cash alternatives. See the original article “When Banks Won’t Lend, There Are Alternatives, Though Often Expensive”.

$30M Investment Helps Kabbage Keep Growing

Kabbage, an online financial service, plans to expand internationally with its recently raised $30 million dollars from providing working capital in less than seven minutes. Company CEO Rob Frohwein cites the lack of available capital for small companies the reason behind his company’s recent growth. Kabbage, one of the first companies to advance loans to “mom-and-pop” merchants, is the provider for online sellers to purchase inventory and resell them on eBay, Amazon, etc. The company makes their funds by taking a fairly small percentage of the advanced capital. Due to their success, the company is attracting investor attention from key investors of blockbusters Google, Facebook, and PayPal. Since last summer, Kabbage has managed to more than double their value with the new capital, in which they aim to devote in supply development, sales, marketing, and expansion into the United Kingdom. Not only is the company planning to diversify geologically, but also beyond the online merchant market. With the apparent financial growth, Kabbage expects to add jobs and square-feet to its office in Midtown Atlanta office. See the full story $30M Investment Helps Kabbage Keep Growing.

Nuance Announces Proposed $350 Million Offering of 5.375% Senior Notes due 2020

Burlington, Massachusetts based Nuance Communications, Inc. will add approximately $200 million to acquisition war chest as a portion of a $350 million bond offering. Although the Senior Note is unsecured, it is fully and unconditionally guaranteed on a Nuance’s domestic subsidiaries. Nuance plans to repurchase the notes from holders upon a change of controls at 101% of the principal amount as well as any accrued and unpaid interest, nearly $354.2 million dollars with which they will use to repay debts and acquisitions. See the full story Nuance Announces Proposed $350 Million Offering of 5.375% Senior Notes due 2020.

Marketing Directly to Consumers of Private Duty Health Home Care

October 12, 2012
A recent article in the Private Duty Today newsletter addresses an issue that home healthcare providers often face: how to effectively market their services without breaking the bank.  After conducting market research, the author of the article put together a breakdown of the most effective marketing methods for this important field. The top four of the top results are displayed below, along with the percentage of responders who found the technique highly effective:

  1. Website (62.5%)
    You must have a functioning website that ranks high on search engines.
  2. Health Fairs (45.2%)
    Take advantage of opportunities for networking with other health care providers and getting that referral when the time comes.
  3. Sponsorship of Community Events (34.3%)
    A banner ad isn’t enough; you have to be actively involved with the event you sponsor (such as an Alzheimer’s Association or Parksinson’s disease fundraiser)
  4. Writing for Local Magazines and Newspapers (25.8%)
    A great way to build your brand is to write a column or an “Ask the Experts” in the local newspaper dealing with aging issues .

See the original article, Marketing Directly to Consumers of Private Duty Health Home Care.

Four Ways to Deal with Non-Paying Customers

The TemPay Staffing Times recently published an article that highlights a major problem facing modern staffing agencies: cash flow interruptions due to non-paying customers.  In a seasonal and fluctuating industry like temporary staffing, timely payments are extremely important as they are used to cover payroll and other expenses.

Dealing with problematic customers requires a delicate balance between firmness and lenience. The article outlines four ways to deal with these types of customers:

1. Keep on top of trends such as payment histories, so it’s easier to examine problems when they arise rather than figuring it out retrospectively.

2. Before getting frustrated with the customer, make sure that a change in your own protocol isn’t the cause of the problem.

3. Maintain composure while talking with delinquent customers, and focus on indentifying the problem and coming up with solutions.

4. Consider making customers who are routinely behind deliver payment directly to your offices.

If you attempt these steps and the customer still won’t pay, it may be time to cut off services. But, the article points out, if you have made an honest effort to help then the fault lies with the customer, not you. Click here for the original story, Not Getting Paid? 4 Ways to Deal with It.

Overview of Nurse Staffing Accounts Receivable Factoring

When your nurse staffing agency bills clients, you know that medical providers (i.e. hospitals, nursing homes, medical clinics, etc.) can take months to compensate you for your staff’s time. When you use nurse staffing accounts receivable factoring to secure funding for your company, you can:

  • Rest assured that you can pay bills and employees on time.
  • Have the confidence to make the necessary moves toward expansion.

What Is Nurse Staffing Accounts Receivable Factoring?
In nurse staffing accounts receivable factoring, outstanding invoices are converted into cash through a ‘factor’ for a discount. This means that instead of waiting for your clients to pay you for your staffing services, you will be able to use the money your workers have already earned right away.

Most factors offer nurse staffing non-recourse factoring: this allows a factor to be held responsible for unpaid invoices if the staffing agency goes out of business or declares bankruptcy during the time in which the owner’s invoice was factored. Non-recourse factoring does not cover:

  • Very late payments where there is no bankruptcy.
  • Disputes over invoices.
  • General collections issues.

With accounts receivable factoring, you won’t hesitate to accept large staffing requests due to lack of funding.

Click here to read more about nurse staffing accounts receivables factoring.

Factor Finders Helps Factoring Brokers Increase Commissions

The invoice funding specialists at PRN Funding, LLC wanted to share some exciting news with the factoring brokers and cash flow consultants who consistently read our blog.

We have launched a sister company to aid factoring brokers in closing more deals — Factor Finders, LLC.

Factor Finders knows how to get complicated deals done. We have formed extensive relationships with a network of credible funding companies all over the globe. If you can’t find a funding source for your prospect, we can, and we will split commissions 50-50 once a deal is done.

Want to learn more? Check out the video below to learn how Factor Finders can help you get more commissions!

Contact us at 1-855-FACTOR-1 or visit our Factoring Broker Program page on our web site for more details.

Credit Index Drops: Consider Small Business Factoring Instead

Earlier this month, ABFJournal.com, cited a report from the National Association of Credit Management (NACM) that the small business factoring experts at The Factoring Blog thought would be of some interest to our small business owners looking for financing. In a nutshell, the ABF Journal’s Credit Managers Index (CMI) dropped from 54.5 to 53.4 in July.

The article reported the difficulty in predicting the long term effects that the nation’s drought is bound to have on manufacturing factoring customers and invoice factoring clientele that are service providers, which has been hit hardest by the decline, says NACM.

The report indicated a stabilization in credit applications, which dropped from 57.5 to 57.2 between June and July. Dollar collections also dropped, along with a decline in dollar collections. The favorable factor index (the index that measures all of the optimistic components of the report) also dropped from 60.2 to 58.9.

If you’re having trouble applying for a credit card, small business factoring may be the best option for your firm because the process requires no credit check. With dollar collections at an all-time low, it may be time to factor your receivables. Though your clients whose invoices are factored will be subject to credit check, after a 3-5 day approval, invoices take 24 hours to advance.

Hospitals for Profit or for Help?

Did anyone see the article A Giant Hospital Chain is Blazing a Profit Trail in the NYTimes earlier this week?

The article talks about HCA’s revamped billing procedures and revised patient screenings that have led them to be extremely profitable health care industry giant during a time when so many of America’s hospitals have been struggling to stay out of the red.

According to the article, “Among the secrets to HCA’s success: It figured out how to get more revenue from private insurance companies, patients and Medicare by billing much more aggressively for its services than ever before; it found ways to reduce emergency room overcrowding and expenses; and it experimented with new ways to reduce the costs of its medical staff, a move that sometimes led to conflicts with doctors and nurses over concerns about patient care.”

What are your thoughts on this article?

Frequently Asked Questions for Factoring Brokers

PRN Funding, LLC has been in the business of healthcare factoring for over a decade. Since the company’s inception, we’ve always valued our factoring broker relationships. We even put together a quick reference guide of Frequently Asked Questions for Factoring Brokers on our company web site.

Q: What types of healthcare invoice factoring clients should I send to PRN Funding?

A: We focus exclusively on providing funding for companies that supply goods or services to medical providers. Examples of prospective clients include: temporary nurse staffing agencies, medical transcription services, medical coding companies, outsourced medical billing companies, medical supply companies, etc.

Q: Can my client qualify if it is a start-up company or has a history of credit problems?

A:Yes. PRN Funding has flexible healthcare factoring options for all types of businesses in all kinds of financial situations.

Q: Does PRN Funding loan my clients money?

A: No, PRN purchases your client’s accounts receivable. We make an outright purchase of the financial rights to your client’s invoices, and advance cash immediately.

Q: What invoices qualify for purchase by PRN?

A: Any valid invoice for services already performed or goods sold to a creditworthy customer, government agencies included.

Q: Are there any restrictions on the size of the invoice or the location of my client and my client’s customers?

A: No. PRN Funding has no minimums and no maximums. We grow with your clients as their companies expand.

Q: Does my client have to sign a term contract with PRN?

A: No, PRN Funding provides the ultimate in flexibility. PRN Funding does not require our clients to sign a termed contract.

Q: What is required before buying an invoice?

A: The work/goods must have been completed, delivered and accepted; and your customer must be a creditworthy risk.

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