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.

AR Factoring – An Alternative Funding Option For Small Businesses

Because of their lack of financial sophistication and size, today’s small businesses continue to face the hardships brought on by current economic challenges. Many firms struggle to maintain their bank credit facilities, and securing a new line of credit or increasing a company’s current limit is nearly impossible. So if the lending wells have dried up, what’s a small business owner to do? Capitalize on the benefits of accounts receivables factoring.

Once a small business owner has been approved by an accounts receivable factoring firm, the basic invoice factoring process is as follows:

  1. A small business owner’s customer requests goods or services from the company.
  2. If it’s a new customer, the business owner should request a credit check and approval by the invoice factoring firm. Once approved, the company completes the service or delivers the goods.
  3. The business owner issues an invoice, reminding the customer that their receivable has been sold to and will be collected by the factoring firm.
  4. The business owner submits a schedule of accounts for purchase to the factor, including the supporting documentation (purchase orders, invoices, time-sheets, etc.).
  5. Upon verification of invoices for pre-approved customers, the A/R factor will advance funds within hours.
  6. The factoring firm provides all accounts receivable and collections services as required.
  7. In most cases, the customer makes payment(s) directly to the factoring company’s lock box.
  8. Upon receipt of the payment, the invoice factor remits the difference (reserve) between the collected amount and the advance, less the discount fee.

It’s easy to get things started. In most cases, the owner needs only to complete a brief application and present a current accounts receivables aging report to begin the process.

As if a quick approval process wasn’t good enough (banks can take months to approve a loan), there are numerous additional reasons why factoring invoices is an attractive alternative financing option for small and medium-sized businesses-the first being that entrepreneurs with less-than-perfect credit can qualify for financing based on their customers’ creditworthiness. This is simply not the case when looking for a bank loan. Traditional lenders review the applicant’s financial strength in combination with the company’s operating history before they are willing to extend credit.

Furthermore, healthcare invoice funding also gives business owners the ability to offer credit terms to their customers. Especially in today’s economy, customers appreciate the value of having a 30-day grace period to make a payment. Because a business owner receives up to ninety percent of the invoice upfront each time he/she factors, their cash flow remains unaffected by the net-30 terms.

Additionally, accounts receivable factoring helps owners build their company’s credit. Once an entrepreneur begins healthcare factoring and has adequate cash flow, he/she is able to pay vendors on time, establishing a good credit history with them. This makes it so much easier for business owners to get credit from other vendors and increases their chances of borrowing from bank in the future.

All in all, invoice funding instantaneously relieves business owners from many of the stresses involved with managing working capital. The ongoing factoring process is straightforward and easily adaptable. Accounts receivable factoring gives small business owners the ability to control their company’s cash flow as the business grows, while simultaneously improving their creditability.

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

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 FactoringInvestor.com 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.

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 TheStreet.com.

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.

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 FactoringInvestor.com.

Find Nursing Info on Twitter

Howard Gerber of Sunbelt Staffing did a great blog post about how nurses can use Twitter to stay up-to-date on nurse industry news. For the convenience of our nurse staffing industry readers, the temporary nurse staffing invoice funding specialists at PRN Funding wanted to re-post the valuable information on The Factoring Blog as well:

As a nurse, you probably work long hours and have very little down time to read about medical news, keep up with other nursing journals or nursing issues. Twitter can make it much easier to keep up with the latest news and information. By following accounts specific to the field of nursing, you can have all of the news and information sent to you in short bursts that can be read quickly. If they interest you, you can follow links for more information. With free Twitter apps available for all smart phones, you can keep up while on breaks at work or while you are on your commute home – as long as you aren’t driving!

@NursingTimes

This Twitter account is maintained by the Nursing Times website. They tweet multiple times a day and include news items related to the field of health, nursing, and nursing education.

@AmericanNurseToday

This is the official Twitter account of the journal for the American Nurses Association. They tweet news articles from their own journal as well as from other health publications several times a day.

@NEJM

This Twitter account is maintained by the New England Journal of Medicine. While this is not a journal specifically for nurses, they do provide a wide range of medical information. The Twitter feed is updated several times a day as new articles are published to their site.

@AmJNurs

The American Journal of Nursing is a peer-reviewed journal that has been publishing evidence-based articles since 1900. Their Twitter feed is updated numerous times a day during the week and include links to their own articles, news articles, and information posted by other health organizations.

@MinorityNurse

Minority nurses, nursing students, and faculty often face unique challenges in the field of medicine. This account tweets frequently and includes links to their own articles as well as to general health articles and resources for minorities.

@MedSurgNurses

This Twitter account is maintained by the Academy of Medical-Surgical Nurses. This is a national organization specifically for medical-surgical nurses. They update several times daily during the week with links to nursing news and resources as well as recommendations for other Twitter accounts to follow in the field of health.

@aorn

This is another nursing specialty account maintained by the Association of PeriOperative Registered Nurses. They discuss issues specific to their field as well as general health topics and items of interest to nurses in general.

There are hundreds of Twitter accounts that are maintained by nurses, nursing students, nurse educators, nursing journals, nursing schools, and nursing associations. Use these as a starting point and look at the organizations they are following as well as who they have as followers to find even more accounts you may be interested in.

Invoice Factoring: Verification vs. Notification

The invoice funding experts at PRN Funding are frequently asked: When it comes to invoice factoring, what is the verification process, and what it the notification process? Watch this video to find out:

Invoice Factoring Notification Procedures

At some point in the beginning stages of a factoring relationship, the invoice  funder will communicate with your clients’ accounts payabale department in order to make them aware of the new factoring relationship as well as give instructions on where to send future payments. This can usually be accomplished with a quick phone call and/or email. In most cases, the factor will send a written notification via fax or email to re-affirm what was discussed over the phone.

Invoice Factoring Verification Procedures

Verification procedures differ depending on the funder and depending on the type of business you operate.

For example, if you run a medical supply company, a good way for a factor to verify the invoices is to view a copy of the signed delivery receipt and/or speak to the person who accepted the shipment to confirm that they are satisfied with the supplies.

On the other hand, if you own a nurse staffing agency, where you are, in effect, providing a service, rather than a concrete good, the verification process will be slightly different. Most likely, factors will verify invoices with signed timesheets and/or periodically speak with a Director of Nursing (DON) at the facility where you staff to confirm the nurses listed on your invoices worked the shifts listed on the invoices.

Some factoring clients are concerned that a factoring firm who notifies and verifies will become hurt their vendor-customer relationship, the opposite is true.In most cases, notification and verification procedures are brief and non-intrusive.

Do you have more invoice factoring questions? Feel free to write them in the comments section below…

AAPC Launches ICD-10 Resource Site

According to the ADVANCE Perspective HIM Blog, the American Academy of Professional Coders, a trade association dedicated to serving the medical coding industry, recently created an ICD-10 resource site in preparation for the government’s mandated ICD-10 changeover in October 2013.

ICD-10 is expected to affect all heathcare professionals, not just the administrative medical coders and medical billing staff.

Among the key features include:

  • An ICD-10 code conversion tool allowing users to translate an ICD-9 code to ICD-10 instantly;
  • ICD-10 news and articles from industry experts helping prepare for implementation;
  • Two interactive floor plan tools that show how ICD-10 affects all aspects of a practice or health plan; and
  • An online application used to track and graphically measure the ICD-10 implementation progress.

For further information about ICD-10 implementation, please visit the AAPC ICD-10 site.

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