Transcend Acquires Medical Dictation Services, Inc.

From time to time, PRN Funding’s medical transcription factoring specialists are asked the following question: What is going on in the medical transcription industry as far as mergers and acquisitions are concerned?

That’s why we took the time to report on Transcend Services’ recent acquisition of Medical Dictation Services, Inc. (MDI).

At the end of August, Transcend Services, the third largest provider of medical transcription services to the U.S. healthcare market, announced that it would acquire Medical Dictation Services, Inc. for $16.2 million.

In a press release issued August 26, MDI Chief Executive Officer, Dorothy Fitzgerald, said: “I recognized that we needed a larger partner to achieve our long-term growth objectives. A critical concern for me was to find a partner that recognized MDI’s potential and was committed to providing excellent customer service.  I am convinced that Transcend is the best partner for MDI, it’s employees and customers.”

KPMG Corporate Finance LLC and Suender M&A Advisors initiated the transaction and co-advised MDI.

Click here to read the entire press release: Transcend Announces Acquisition of Medical Dictation Services, Inc.

2009 National Staffing Employee Week

The American Staffing Association (ASA) has estimated there are 2.7 million temporary and contract employees who work for staffing firms in the U.S. every day.  To honor these workers, from September 14-20, is a week devoted to them.  There will be planned luncheons, banquets, and office parties throughout the week.

The ASA has given some tips on how to improve your event this week.

  • Place thank-you stuffers inside check envelopes
  • Give out award certificates to all of your employees
  • Send thank-you postcards to clients to thank them for their business
  • Spread the word about your event by sending a press release to your local media

Materials for the tips listed above can be found at americanstaffing.net.

58 Million Credit Card Holders get Credit Lines Cut

According to an Associated Press article, credit card companies, pressured by the faltering economy, cut credit limits to 58 million card holders from April 2008-April 2009 even those these card holders didn’t necessarily have bad credit scores. 

In fact, FICO, a company that produces credit scores, reported 73% of the 33 million card holders whose lines were cut between October 2008-April 2009 had no new negative information in their files.  Craig Watts, spokesman for FICO, speculates that lenders probably accessed different information to base their decision on whose credit lines would be cut. 

Consumers, who are already feeling the pinch of the economy, are questioning why they are being punished. 

Gail Hillebrand, senior attorney with Consumers Union, said, “The consumer perception is that ‘I did everything right and my limits were cut’ is true.”

FICO’s explanation was that some card holders had negative information, such as late payment histories, that affected their credit lines.  Late payments are a sign that a consumer is a higher credit risk. 

More than just the individual consumers depending on credit cards are the business owners who depend on personal credit cards for everyday business expenditures. 

Hillebrand said these small business owners are having severe cash flow problems.  Without a smooth cash flow, a small business struggles to pay their employees on time as well as buy new inventory and/or equipment to expand.  Luckily, accounts receivable factoring can help these business owners when their credit lines are cut.

To read the entire Associated Press article, click here: Banks Cut Credit for 58M Card Holders in 1 Year

Entrepreneurs Struggling to Get Tradition Funding

John Tozzi, a writer for BusinessWeek, wrote a piece recently describing alternative sources of funding for entrepreneurs…

As the economy slowly improves, banks that have severely tightened their lending standards won’t be loosening them any time soon.  In fact, a recent survey conducted by the Federal Reserve of senior loan officers shows that banks will maintain high lending standards for another year and a half.  Paired with a terrible job market and a credit card industry that has significantly lowered limits and increased interest rates, entrepreneurs who wish to start a business are finding it more difficult than ever.

Luckily for these funding-starved businesspeople, there are alternative funding sources that don’t break the bank.  These include asset-based lenders, merchant cash advance providers, and factors. PRN Funding is an exampled of a factoring firm.

According to the Commercial Finance Association, asset-based lending increased 8% in 2008; increases are also expected in the coming years. 

There are other unique lenders sprouting up who are trying to take advantage of the credit-depressed market.  Jim Mayer, an entrepreneur from Chicago, is bringing back a firm he started in the 1980s called DiversiCorp.  His company specializes in collateral control-reassuring creditors by safeguarding their inventory after it is shipped but before it is paid for.  The inventory acts as the collateral while outside lenders extended the credit. 

To read the entire Business Week article, click here: Entrepreneurs Turn to Alternative Finance

Credit Cards for Small Businesses

John Tozzi of BusinessWeek.com recently wrote an article about startup companies using small business credit cards to finance their business.  A study by the Kauffman Foundation indicated that new businesses that use small business cards are more likely to fail.  Specifically, the chance a new business will fail goes up by 2.2% for every $1,000 of credit card debt. 

As banks give out fewer loans, credit cards have become popular as an alternative source or financing.  However, if a small business is consistently carrying a balance on its credit card, there’s a good chance that the business it is on the decline.  Interest rates on small business credit cards have skyrocketed due to higher delinquency rates among these companies. 

Tozzi refers to a report conducted by Robert Scott, a researcher who took the data from the Kauffman Firm Surveys from 2004-2006.  Scott admits in his report that, “With the recent contraction of credit markets, many new businesses will face difficulties in accessing traditional forms of credit…”  Tozzi points out that one of the most readily available sources of financing to small businesses is also the main contributing factor causing them to fail.  Unfortunately, credit card reform laws put in place by President Obama earlier this summer do not give small businesses the same advantages that consumers will now enjoy.  However, Congress has been working on amendments to the credit card reform bill to give small businesses some of these advantages.

Luckily, small businesses have another financing option available to them: factoring.  Instead of waiting weeks or months to be paid by their customers, companies can sell their receivables to a factoring firm and receive cash immediately.

To read the entire BusinessWeek.com article, click here: Credit Card Debt Hurts Startups

Alternative Funding Options for Small Business Owners

Diana Ransom, a small business reporter for the Wall Street Journal, has some tips for financing your small business.  Business owners are discovering that their typical sources are restricting loans’ credit terms as well as the number of loans they give out.  An April survey done by the Federal Reserve shows 75% of domestic banks are tightening credit for small businesses, up from 70% in January.  Credit card companies are also increasing their rates and limiting their terms for small business cards, if they still offer small business cards to begin with.  While traditional lines of credit dry up, below are five alternative sources of funding for small businesses:

Government-backed loans: The Small Business Administration (SBA) started to guarantee up to 90% of some loans.  According to Brian Hamilton, CEO of Sageworks in North Carolina, preferred SBA lenders might be more apt to give your business an SBA-backed loan.  Ever since President Obama signed the American Recovery and Reinvestment Act (ARRA) in February, the weekly loan dollar volume has increased more than 40%. 

Community banks and credit unions: As the lending situation improves, community banks are looking to issue more loans.  Also, as larger lenders tighten their terms, credit unions will have the option of taking on more small business loans.

Peer-to-Peer networks: Websites such as Prosper, Virgin Money and Lending Club allow borrowers to find individual private contributors online to fund their businesses.

Microlenders: Recently, the higher rates generally given by microlenders have come down.  One microlender, Accion, reduced its rates from between 11% and 18% to between 8% and 15%.  In addition, the SBA offers microloans at rates between 8% and 13%. 

Accounts Receivable Factoring: Although CIT, one of the nation’s largest factoring firms, is going under, there are plenty of other smaller and comparable factoring firms that will advance you up to 90% of the receivable.  PRN Funding, LLC is one of those factoring firms.

Click here to read the entire Wall Street Journal article: Five Alternative Sources of Funding

Jobs in Health Care Rising

President Obama’s Council of Economic Advisors released a report Monday surveying the parts of the labor force that are expected to grow most rapidly in the future.  The report is a reminder to everyone in the health care industry that it is one of the few industries still growing.

Specifically, professions in health care including home health care, outpatient care, and medical laboratory positions will add the most jobs. 

This is good news to our clients as well as to entrepreneurs looking to start their own healthcare-related business!

Click here to read the complete New York Times article: Job Growth in Health is Expected to be Strong

Remote Deposit Popular Among Small Businesses

A recent article from the Wall Street Journal profiled a growing trend among small businesses: depositing checks over the Internet. Instead of being pressed to make physical deposits with banks during the week from 9:00am-5:00pm, remote deposit offers the convenience of depositing checks at any time and place.  All you need is an Internet connection, a personal computer, and a scanner. 

In 2008, a survey conducted by Aite Group LLC of 300 businesses with less than $10 million in annual revenue found that about 16% were depositing checks online.  By the end of 2009, the firm predicts this percentage will jump to 25%. 

While firms try to cut costs in the down economy, some question why businesses are willing to pay the bank a monthly fee to use remote deposit.  Some banks charge upwards of $85 a month for the service as well as the fixed cost for the check scanner.  The convenience factor of remote deposit seems to outweigh the extra costs though.  Diane Rubinstein, controller of The Epilepsy Foundation, was quoted in the article, and she explained depositing checks online has helped her accept 200-300 more checks per month, and it saves time and paper.

Another advantage of depositing checks online is it increases a company’s cash flow.  Some banks will place the money into your account the next day if the remote deposit is made by a certain time the night before. 

As with any online banking service, there are several security risks involved with remote deposit.  Hackers could gain access to your account and checks could be scanned more than once.  Michael Kaiser, the executive director of the National Cyber Security Alliance, advises companies stay up-to-date with security software and frequently change their passwords. 

Click here to read the entire article: Not-So-Personal Banking

Obama Talks Health Care on ABC

As President Obama advocates for a health care system overhaul, many Americans are questioning how it will function as well as how the country will pay for it.  The Wall Street Journal’s Health Blog profiled Obama’s televised town hall meeting on ABC last week to try and explain his plans in more detail.

The President assured Americans that the government will not force them to switch doctors or health insurance plans.  Also, private companies will still be able to choose different plans for their employees on their own.  However, critics argue that given a cheaper government option, most businesses will jump ship from private insurance companies. 

Health insurance companies feel threatened by the proposal, stating that a government program would put them out of business.  Obama responded to these concerns by admitting he wasn’t sure a government plan would be included in his final proposal.

Additionally, Obama explained that the funding for his health care system would either come from lowering the amount that wealthy Americans can deduct on their taxes or from taxing health benefits. Regardless of how he accomplishes this, many wonder if Obama will be the first president to solve the problem of uninsured Americans.

Little is known right now about how President Obama’s healthcare reform will affect healthcare vendors like medical billing and coding companies and/or temporary nurse staffing agencies. They will have to wait patiently to see how the President’s changes will affect them.

To read the entire Wall Street Journal Blog article, click here: Separating Fact from Fiction on Health-Care Reform

To view a clip of the town hall meeting, click here: President Obama Defends Right to Choose Best Care

For a full transcript of the meeting, click here: Questions for the President: Prescription for America

Cash Flow Concerns Rise as Confidence Levels on Economy Fall

The Discover Small Business Watch’s monthly index is confirming the general population’s dwindling confidence in the economy.  The index, which began surveying randomly selected small businesses in August 2006, fell more than 10 points in May to 78.1.  The survey poses six questions to small business owners and includes whether or not the owner plans to decrease spending on development and if the owner believes the economy is worsening. 

Ryan Scully, director of the Discover business credit card, explains that he, “…saw cash flow problems jump this month to their highest level in two and a half years, which is certainly not going to boost the optimism of a small-business owner, especially in this economic climate.”

In May, about half of small business owners surveyed have had short-term cash flow problems in the past 90 days (up from 40% from April) and another 53% say they have plans to reduce spending on business development over the next six months (up from 46% in April). 

Click here to read the entire article: Business Owners Report Cash Flow Concerns

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