Last week, PRN Funding exhibited at 2007 Staffing Worldconference in San Antonio, TX. Overall, the show was slow for us exhibitors, but we did notice a couple of things during our stay.
There were a number of accounts receivable factoring companies on the exhibit hall floor, so the attendees we met were very interested in learning about how PRN Funding differed from the other factoring companies in the room. So we told them…
All too often we have a prospective client interested in using PRN Funding’s factoring services, but their accounts receivable are already pledged as collateral for a line of credit with the company’s bank. This type of situation throws a wrench in the factoring equation for a number of reasons. We stumbled upon a blog that explained the details of this kind of situation, so we’ ve posted it for the benefit of our readers.
Click here to read the original post: Banks and Collateral or scroll down to learn more…
When we get an inquiry for invoice factoring we find this situation more times than you can imagine. An early stage company is just getting going and they need some extra cash to start out. Because the owners are unfamiliar with accounts receivable financing they instead go to their local bank and ask for a loan. Being an early stage company they don’t have historical profitability or real assets. What they usually have are personal assets, like home equity, or stocks to put in escrow, or even a well off friend or relative that will sign the loan as a “guarantor”.
Given enough personal credit or liquid equity the bank processes the loan request and gives its approval. Knowing not much is happening at the business, the lender is not making a credit decision based on the value of any business assets. When loan closing happens papers are slid across the table for the borrower to sign. Being happy to get a bank loan, the borrower signs away. But, there’s one particular item that could have significant ramifications to future success and capturing any additional commercial capital.
It’s called the UCC-1 financing statement. (read http://www.ccassociates.com/ucc1.html) Lenders as a normal course of business assign all the tangible assets of the company. What this means is, six months or a year later when the borrower is looking for more operating capital, they find out about a factoring company and ask to have their accounts receivables financed. Well the factor can’t because ownership of the accounts receivable are secured by the bank.
Access to capital has just become more complicated just by signing a form. The options are to pay off the bank, pay down a significant portion of the loan, or get the bank to simply “subordinate” the A/R which effectively releases their ownership of it. Also beware, leasing companies, suppliers that offer credit terms, previous owner financed loans, all of these potentially will secure your receivables as collateral. As the borrower you can negotiate the terms of the UCC. If there are no receivables when you get the loan, tell the bank to leave them out of the financing statement.
When securing commercial credit, ask about the UCC-1. Ask what collateral will be secured. If it’s not what you have agreed on, tell them before going to closing. That way you can still use invoice factoring as an option.
PRN Funding’s very own president had an article featured in the April 2007 issue of e-Perspectives. In his article, How to be an A+ Tradeshow Attendee, Cohen gives medical transcription service owners (MTSOs) advice on the importance of attending industry trade shows. Among the more popular trade shows Cohen suggests attending are MTIA’s and AHDI’s (formerly AAMT) annual conferences.Click here to read Phil Cohen’s article on the PRN web site: How to be an A+ Trade Show Attendee.
Q: Do you have any other suggestions for trade shows worth attending?
Overall, the American Cash Flow Association’s (ACFA) 2007 trade show was a prosperous one for PRN Funding.Check out Nikki Flores’ thoughts on the 2007 Cash Flow Conference:
There was a lot of rain down in Texas, but it didn’t stop the motivated cash flow consultants from coming out of the woodworks. There was a steady stream of traffic stopping by the PRN Funding booth, with brokers stopping to pick up consultant packages and grab our Krispy Kreme donuts.
On a whole, the cash flow consultants we met were well-trained and eager to learn about PRN Funding’s niche in factoring for healthcare vendors. In addition to booth traffic, both of Philip Cohen’s (President of PRN Funding, LLC) presentations were well attended. Cash flow consultants who were unable to attend his presentations, “The other type of healthcare receivables” and “How to choose the best factor for your prospects” can receive free copies of the presentations by emailing nflores@prnfunding.com.
Keeping up with developing online trends, PRN Funding unveiled the newest addition to our Web site today, a corporate blog.
As well-known factoring experts to the healthcare services arena (medical staffing agencies, medical transcription services, medical coding companies, etc.), we will use the blog to communicate important information to the healthcare vendor market as well as give fellow bloggers the opportunity to join in on the conversation by posting comments directly onto the site.
Topics to be posted and discussed within the blog include: factoring news, medical services industry news, including updates within the temporary nurse staffing, medical transcription services, medical coding services and medical supply industry news.Check back often because the blog will be updated frequently with current trends and news within the healthcare and factoring industries.
