Ways for Business Owners to Weather the Bad Economy

During an economic downturn, small businesses are often hit the hardest first, and a ripple effect works its way through the rest of the business world. According to the article, Entrepreneurs Finding Ways to Thrive, “When small firms can’t grow, the impact is felt in loss of jobs, revenue stagnation and supplier retrenchment.”

An Atlanta-based SCORE counselor, Steve Bloom, was quoted in the article saying, “There’s no safety net for small businesses…The SBA is not in the business of making loans to small businesses; it only offers financial guarantees to participating lenders.”

So if startup and small businesses are the crux of the business world, and they cannot obtain loans from banks and the SBA during a bad economy, what options are left?

For starters, small business owners can sell their invoices to a factoring firm. (For example, small MTSOs, medical staffing agency owners and medical coding company owners could certainly sell their receivables to PRN Funding, which is an accounts receivable factoring company dedicated to funding healthcare vendors.)

Bloom suggests increasing your networking opportunities by joining trade associations, chambers of commerce and rotary groups to locate private investors. He also suggests that small business owners plan ahead by setting aside 3-6 months worth of operating costs and salaries.

Coauthor of So, You Want to Start a Business? 8 Steps to Take Before Making the Leap, Ed Hess, advised in the article for small business owners to draft a detailed emergency plan.

Some other simple suggestions include sending out invoices promptly and offering discounts for quick payment, lease instead of buying, and hire part-time employees instead of full-time ones.

5 Golden Rules to Make Cash Flow Work

American Express created the OPEN Book with tons of tips on how to grow a small business. Paging through the OPEN Book, one article jumped out: Go With the Flow. The brief article was written by Raymond Joabar, Senior VP and GM of Lending and Network Development, and he gives “5 golden rules in order to make cash flow work for you instead of against you.” We’ve summarized the rules below for the factoring blog‘s readers:

1. Know how to measure it. Joabar suggests monitoring your cash flow by reviewing balance sheets and cash flow statements, as well as the number of days it takes to turn inventory, and how long it takes for cash to cycle through the business.

2. Know the causes of cash flow problems. When businesses hit a growth spurt, that means more cash is needed to invest in additional inventory and infrastructure. On the other end, if your customers aren’t paying you quick enough, it can also lead to cash flow problems. Finally, slow sales lead to poor cash flow. Joabar says it’s important for busienss owners to understand the fundemental causes of cash flow to help avoid problems before they begin.

3. Build strategies that can maximize cash flow. Joabar strongly urges business owners to “get serious about minimizing fixed expenses” and “find creative ways to handle peaks in demand without hiring additional staff.” He says to think about using credit cards rewards programs and frequent flier point as cash substitutes when making purchases. In addition, it’s important for you to set clear payment terms and expectations with your clients.

4. Prepare for the Worst. Simply put, Joabar advises for business owners to get a “jump on the cash flow problem by lining up several sources of financing in advance.” Accounts receivable factoring is a great way to manage your cash flow during times of rapid growth.

5. Grow Smart. “Consistent growth is the best way to smooth out bumps in cash flow,” according to Joabar. “When opportunities for growth present themselves, plan carefully.” Every investment, including custoemrs, should have clear returns.

New Medical Coding System Gets Much More Complex

BCAdvantage posted an article in its e-newsletter last week that discussed the forthcoming medical coding system overhaul, known as ICD-10. Although an updated medical coding system has been needed for a number of years, many in the health care industry fear the switch will “initially cause headaches for consumers and their doctors.”

According to the post, hospitals, insurance companies and many doctors all agree that the new medical coding systems was necessary to keep up with the ever-increasing new medical developments, but the problem with the new system is that it drastically increases the number of codes used to define various ailments and procedures to 155,000, which is ten times as many codes as are currently in use.

In addition, “some medical-industry officials also are concerned that consumers could see…an increase in billing errors. That can lead…to overcharging of patients, or an insurer denying payment for claim because it was submitted with an incorrect code. Some officials also expect an increase in billing fraud and more delays in payments to doctors and consumers.”

In a nutshell, when this new medical coding system goes into full-swing, it’s possible that Medicare, Medicaid and other third-party insurance companies will take longer to reimburse medical facilities. It’s quite possible that if it takes longer for medical facilities to receive payment from third-party payors, then it will take longer for medical facilities to pay their vendors. This is where PRN Funding’s accounts receivable factoring program enters the equation, as PRN Funding specializes in factoring healthcare vendor invoices made payable by medical facilities.

Click here to read the entire BCAdantage article: New medical coding system more precise, more complex.

Ways to Get Paid Quicker in a Bad Economy

Scott Love of RecruitingMastery.com, wrote an excellent article in Net-Temps Recruiters e-newsletter that gave recruiters tips on how to get quick-paying clients.  More specifically, he advised recruiters to use “fear of loss” as a motivator.  Translated to healthcare vendors like medical staffing agencies and medical transcription services, threatening to pull your nurses or ceasing your transcription services until until a check is received is a good attention-grabber and lets the medical facility know that you mean business.

Love also highly recommends putting your terms directly on your invoices, which is something Phil Cohen (president of PRN Funding, LLC) suggested to temporary nurse staffing business owners in part two of his article series: How Nurse Staffing Agencies Can Get Paid Quicker.

Not to mention, another way for business owners to get paid quicker during a bad economy is to utilize invoice funding.  Selling your invoices to a factoring company is a great way for you turn your receivables into cash immediately.

PRN Funding Accepts Credit Cards

As an account receivables factoring firm who specializes in funding medical staffing companies, factoring invoices for medical transcription services and providing financing to medical coding companies, we (PRN Funding, LLC) made a big announcement today.

In order to serve our clients to the best of our ability, PRN Funding is now accepting VISA, MasterCard, and American Express credit cards as a form of payment on its clients’ invoices.  Traditionally, PRN Funding has only accepted checks and direct deposits.

Click here to read the entire press release on PRN Funding’s web site: PRN Funding Now Accepting Credit Cards.

IRS Files $80 Million Claims Against Chimes’ Debtors

It’s been almost a year since we first blogged about Ensemble Chimes Global vendor management system filing for bankruptcy, and bankruptcy trustee, Howard Ehrenberg announced last week that “they are pretty close to making claims against certain third parties.”

In a Staffing Industry Analyst’s post, Ehrenberg also mentioned that the IRS made $80 million in claims against the debtors in the Chimes bankruptcy case, including $50 million as a priority claim ahead of unsecured creditors (i.e. temporary staffing agencies).

In regards to temporary staffing firms who utilized Chimes’ vendor management system, Ehrenberg said that a few customers are continuing to dispute a court order to pay management fees.  “If those customers don’t pay, the court has allowed the fees to be collected from staffing firms involved.”

Click here to read the entire post: Claims may soon be filed in Chimes case.

Small Business Cash Flow Issues Continue to Intensify

Every month, Discover Financial Services publishes a Small Business Watch report on its Web site.  Here is a list of some of their Small Business Key Findings for the month of November:

  • 44% of small business owners have experienced cash flow issues over the last 90 days, up sharply from 38% in October. This is the category’s highest rating since April 2008, when the same number of business owners reported cash flow issues.
  • 33% of owners who sell business-to-business said they had cash flow issues in the last 90 days that caused them to hold off paying some bills
  • 51% plan to decrease spending on business development over the next six months, up significantly from 42% in October and a record high in this category
  • 65% of business owners view the economy as poor
  • 54% of business owners believe economic conditions for their business are worsening, and only 15% feel conditions for their business are improving
  • With the results from an election poll, business owners want President-Elect Barack Obama and Congress to make taxes a top priority, even though 64% said they are not confident that the federal government and Congress can address the needs of America’s small businesses

Q: Do you feel the results of this poll are in line with your own business?

Fed Reveals Plan to Spark Business Lending

According to the Credit & Collections World Wide web site, the Fed and Treasury officials announced the creation of a “new Term Asset Backed Securities Loan Facility which will lend up to $200 billion to holders of securities that back credit card, auto, small-business and student loans” this morning.  This is a strategic move is hoping to jump-start the issuance of new consumer loans and business loans backed by the U.S. Small Business Administration.

Officials from the U.S. Department of the Treasury and the Federal Reserve hope the move will “enable a broad range of institutions to step up their lending, enabling borrowers to have access to lower-cost-consumer-finance and small-business loans.”

Click here to read the entire post: Fed Unveils Plan to Spark Consumer, Business Lending.

eBay of Working Capital Goes Live

Awhile back, PRN Funding blogged about The Receivables Exchange (TRE), an up-and-coming online accounts receiveable marketplace for business owners who want to turn their receivables into cash instantly by putting their invoices up for bid and specifying what kind of discount it is willing to offer.

In his article for The New York Times, writer Brad Stone said “The site provides a much-needed financing option for companies that are finding the doors locked at traditional credit markets.  It could also be a safe financing alternative for distressed start-ups that might otherwise have to sacrifice equity in a conventional bridge loan.”

Business owners and accounts receivable factoring firms are both intrigued by and weary of the developing company, and only time will tell how successful or unsuccessful The Receivables Exchange will be.

PRN Funding to Speak at NNBA Meeting

Next weekend, PRN Funding will be in Daytona Beach exhibiting and sponsoring breakfast at the National Nurses in Business Association’s 19th Annual Conference .

In addition to exhibiting, PRN Funding will conduct a table-top presentation for nurse entrepreneurs entitled: How to Locate Money Sources for Your Business.

Click here to read the press release: PRN Funding Joins Nurses in Business for Annual Meeting.

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