How to Get Low Rates for Medical Factoring

How to Get Low Rates for Medical Factoring
How to Get Low Rates for Medical Factoring

For many doctors who are just starting their private practice, as well as for hospitals and nursing homes, it may not be easy to get the startup capital or operational cash flow needed to operate your business. When banks aren’t as open and enthusiastic about lending money to medical professionals and businesses, factoring becomes the only real possibility. You just have to hope that you get low rates for medical factoring so that you don’t overpay your financing.

Sure, the more innovative medical companies get millions in financing, but for most health clinics it doesn’t come easy. There’s also the very distinct possibility that you haven’t paid off your student loans yet. And if that’s case, the government may even ban you from billing Medicare and Medicaid to get you to pay back your loans first.

But how do you get low rates? It’s not as easy as just checking Google for low rates, however. Just because a factor boasts that it offers rates as low as 1.5% a month doesn’t mean that such a rate will apply to your business.

What you need is the right medical factor, that’s already configured to specialize in your industry. Here are some things you need to check:

  • The factor should have extensive experience working with companies or clinics like yours. By doing so, you’ll know that the medical factor knows which procedures and processes work best in your case. They already have a basic working system in place, and all they need to do is to tweak it to fit your situation. They don’t have to set up a brand new system from scratch. That’s means less work for them, and lower rates for you.
  • They already have prior experience with health insurance companies you normally deal with. Factoring provides you with the advance money you need to run your clinic, but it all depends on whether the paying customer actually pays on time.

For doctors that usually means insurance companies. You may be able to get low rates if the medical factor has worked with these insurance companies before, and the factor has confirmed that the insurance company does pay in full and on time. They no longer have to do extensive background checks on the insurance companies, as this has already been done before. It also assuages any worries that they won’t get paid back.

It also helps if you only deal with a select group of insurance companies, which helps lessen the worries of the medical factor. The more insurance companies are involved, the higher the risk of not getting paid.

  • You give them high-value invoices. It would be better if you have only a few patients, but each one owes you a lot of money for your services. This is better than dealing with numerous invoices worth very little money. For the medical factor, each invoice requires the same amount of work to process, so it would be beneficial for everyone if you only submit high value invoices.
  • You have a long term relationship with the medical factor. Medical factors charge more for short term deals. It might be better to find a factor you can trust and do business with them for the long haul.

Find the right medical factor, and you’ll get comparatively low rates for medical factoring.

Need Medical Factoring? Click Here  or Call 1-888-382-3766 for a fast quote

 

10 Reasons to Look for Commercial Factoring Companies

So you’re looking for additional funding for your company. It’s safe to say that you’re not alone in this situation. But even though you have lots of options now when it comes to funding, perhaps you should take a look at factoring. Commercial factoring companies may be better for you than traditional lenders.

Here are some situations when you should seriously consider dealing with commercial factoring companies:

  1. Your application for a loan or credit line has been rejected. This is pretty much one of the most common reasons for choosing factoring as a source of funding. In fact, the current popularity of commercial factoring companies was because banks started to tighten their belts when the recession began.
  2. You’ve pretty much reached the limit on your current line of credit. Getting an extension or getting a new line of credit from another bank may not be possible, and even if it is, the money may come too late for your needs.
  3. You don’t want to put any more debts on your balance sheet.
  4. You can’t pay for operating expenses or meet payroll. This inability to pay can hinder your operations, sully your company’s reputation, or even shut your company down altogether.
  5. You can’t pay your bills or your debt obligations. Not only will your reputation suffer, but this can also have a negative effect on your credit. That, in turn, can make it more difficult for you to get a loan or a line of credit from a bank.
  6. You can’t purchase materials you need to meet orders. Orders are opportunities for you to make a profit, and by not having the money you’re losing these opportunities
  7. You’re turning down clients who demand at least 30 days to pay. Again, this is limiting your profits, and perhaps also damaging the relationships you’ve formed with clients.
  8. You are a small company or your net worth is negative, but your customers have excellent credit. The size of your company or even your negative net worth is not really of concern to factors. The most important consideration is the likelihood that your customers will pay you. If your customers have great credit, then you’re a shoo-in to get your funding.
  9. You can grow your company faster or more easily if you had the funds available. Growth is crucial for a company, and for that you’ll need the capital which factoring can provide.
  10. You want to take advantage of vendor discounts. Usually, vendors may allow you to pay in 30 days too. But they may offer significant discounts if you pay earlier or even pay upfront. By getting the money in advance from your invoice, you can pay right away if the discount is larger than the fee charged by the factoring company.

Do any of these statements apply to you? If that’s the case, then you are a good candidate to apply for, and receive funding from, factoring companies.

Factoring Statistics that Disprove Myths

Factoring has grown by leaps and bounds all over the world, but in the US it’s still surprising to find so many small business owners who don’t really know much about it. In fact, some of these people think that they know a lot about the factoring industry, but what they supposedly “know” turns out to be untrue.

Industry experts recently compiled factoring statistics that shed light on the topic. These stats definitely disprove several commonly-held beliefs and myths among American small business owners.

Myth #1.Factoring offers an insignificant amount of money on a global scale.

Now this depends a lot on what you mean by “insignificant”. In the US, the factoring volume has reached more than $113.36 billion. Worldwide, the factoring volume exceeds $3 trillion, and that’s hardly what you’d classify as insignificant.

Myth #2.Factoring is a purely (or mostly) American practice.

Some hard-core “patriots” seem to believe that if something is a good thing, then it’s an American thing—like democracy, freedom, and football. But factoring is a worldwide practice, and it’s offered in every continent.

Perhaps the most striking example here is China, which many Americans regard as a backward communist country. Factoring in this country has grown to more than 378 billion euros (or almost $512 billion) according to one estimate. In fact, China is the largest factoring market in the whole world.

Myth #3.It’s only in Third World countries where factoring offers a definitive advantage.

While the assumption that China is a “Third World” country is open to debate, that’s not exactly the case with many European countries. The largest regional factoring market is Europe with about 60% of the total global factoring volume. And according to the factoring statistics, numerous developed countries engage in factoring that completely dwarfs the US factoring volume. These countries include the UK, France, Germany, Spain, and Italy. Factoring is also going strong in Taiwan, Japan, and Australia.

Myth #4.The use of factoring in business is declining due to the increasing number of funding methods.

This isn’t true at all, as the global factoring volume has increased just recently. In the US, factoring growth is at 8%. In some countries, the growth of factoring has been phenomenal:

  • Peru. 253% growth rate
  • Colombia. 55%
  • Korea. 54%
  • Morocco. 49%
  • India. 44%
  • Croatia. 39%
  • Austria. 29%
  • Poland. 29%
  • Australia. 26%
  • UAE. 21%
  • Russia. 19%
  • Singapore. 15%
  • China. 10%

Conclusion

So what do all these factoring statistics mean? Essentially, it means that more and more companies globally are discovering the many advantages of using this kind of funding for operational expenses and for business growth. Despite government initiatives and “lenient” bank requirements. Many small businesses to day still can’t get adequate funding in a timely manner. The chances of getting the money you need are much better with factoring, and you get your money much more quickly.

In addition, you can also negotiate and transfer the responsibility of collecting to the factor who buys your accounts receivable. This saves you a lot of worry, and now the matter of late-paying and nonpaying customers won’t be your problem anymore too.

Need Working Capital? Call 1-888-382-3766 To Speak With Our Friendly Staff

Working Capital Lines for Apparel Companies

Working Capital Lines for Apparel CompaniesIf you own an apparel company, the fact that many clothing retail stores pay for orders in 60 or even 90 day can be somewhat aggravating. Usually it means that all your working capital is tied up in your items or in the accounts receivable. But you often find yourself needing cash now to pay the salaries of your employees, to manufacture clothes, and to pay for overhead and utilities. Fortunately, it is possible (though not always likely) to obtain working capital lines for apparel companies.

How a Line of Credit Works

The way a line of credit works is simple, as it is much like using a credit card. You have a preapproved limit, and you can borrow any amount of money up to that limit. The lender usually has no say as to how you spend the money, unlike a mortgage or a car loan in which the money you get has to be used to buy a house or a car. You only pay interest for the amount of money you actually borrow, but there may be some fees even if you don’t use the line of credit at all. The fact that it is available for you to use has to be paid for. You also have to pay a minimum amount towards the loan each month, with the balance carried over and generating interest.

However, for a line of credit the amount you can borrow is often more than what a credit card will grant you, and the interest you have to pay is also lower with a line of credit.

Advantages of a Working Capital Line of Credit

A line of credit can be very useful, especially for your apparel company if the sales are unpredictable and there is a significant delay in the payment for your products. The line of credit offers you the money you need immediately, and you only borrow what you need. If a lot of money has come in, then you don’t have to borrow more than what is really necessary. But if the money is still all tied up, then you have the line of credit to use for your business expenditures.

Disadvantages of a Line of Credit

Keep in mind, however, that a backup plan is almost always crucial. Lines of credit can be very rare, and especially if you don’t have any collateral to offer. A line of credit is also very easy to abuse. The rules are very stringent as to who can avail of this type of financing. Often your apparel company has to be well-established already, with at least two years under its belt and revenues approaching half a million dollars. Your own credit history will also be investigated as well.

Your limit is also usually set to about 10 to 15 percent of your gross revenue, and if that’s not enough then you may want alternative methods of financing. Finally, often banks may review the terms of working capital lines for apparel companies and then decide not to renew the privilege. You should make sure that you have backup plans so that you don’t run out of money to keep your operations going.

Factoring: A Solution to Your Cash Flow Woes

Most business owners know that during certain times of the year, things can get pretty tight, financially. This is why it’s important to know your options, and factoring is one of them.

Factoring is a tunnel out of cash flow problems.
Factoring is a tunnel out of cash flow problems.

For many years, businesses have turned to factoring companies to get additional cash flow. By becoming proactive and treating receivables as a source of immediate cash, you get additional cash flow that you need at the moment. Invoices from customers that will remit the payments at a much later date are still assets of course, but if you need the cash ASAP, factoring is the solution for you.

Who Benefits from Factoring?

It’s also important to understand exactly who benefits from factoring. Financial firms that offer factoring services will get a transaction fee from those who seek their services, but these are usually firms that have a lot of freed up cash and whose business is really focused on lending money to others. The problem with having too many assets in Accounts Receivable and not enough in Cash is that you don’t have a lot of elbow room to move. Fortunately the ‘factor’ who purchased your invoices and takes over collecting it from your customers will give you this elbow room.

Usually, those who benefit from Factoring services consist of small businesses who don’t have sources of additional cash. They also don’t have the capability to apply for large loans from banks and other traditional lenders. This is because traditional lenders usually look for external collateral that small companies may not be able to provide.

Additionally, traditional financial institutions may look at credit worthiness and credit history, and this becomes a problem for businesses who are just starting out. On the other hand, turning to your invoices as the main source of cash flow is a pretty solid financial strategy.

Advantages of Factoring vs. Loans

Both factoring and applying for a loan will give you elbow room, but here are some reasons why factoring is usually the better option:

  • Goodbye, interest.

With factoring, you forego the interest rates that lenders charge. Depending on your company’s situation, these interest rates can be really steep when you turn to banks for loans or lines of credit. With factoring, which is an ‘advance’ instead of something you ‘borrow,’ interest is something you wouldn’t have to worry about.

  • Flexibility

Factoring also gives you flexibility in terms of how you use the cash. Whether it’s to pay your employee’s salaries, upgrade your current equipment, or fund your Marketing expenses, there’s no restriction whatsoever in how you want to use the money. Compared to loans, you don’t have to do anything to change your capital structure.

  • Risk transfer

While with loans you have the risk of not being able to pay back the bank and getting charged sky-high interest rates, there is no such risk with Factoring. In fact, you’re transferring the risk of your customers not being able to pay you in full to the ‘factor.’

For more information about factoring services, please check out www.neebocapital.com.

 

The Pros and Cons of Factoring Invoices 2013

By: Chris Lanchech

If your company is in dire need of ready cash for your working capital, one way of securing that money is by factoring invoices that your business has accumulated and has not yet collected on. This is just one way of securing quick cash for the company (other typical ways include securing a business loan or establishing a line of credit), and although it is not as common as other options, many companies have found it compatible with their particular needs and circumstances.

What is Factoring?

If your company offers credit to customers, then the accounts receivable (which in the accounting books of customers are labeled as “accounts payable”) constitute part of the company’s assets. It has not been turned into cash just yet—and this is what a factoring company does in a very short amount of time. Instead of waiting for the customers to pay the balance of their accounts, your company can sell those invoices at a discount. For example, your company can receive $900 right away for an invoice that calls for a $1000 payment. When the customers pay their invoices in full, that payment goes to the factoring company.

Advantages of Factoring

Quick ways of securing cash for companies have their own sets of pros and cons, and factoring invoices is no exception. These are the advantages that your company receives should it decide to factor its invoices to a factoring company:

  • Some businesses may find it difficult to get a small business loan or establish a line of credit. Invoice factoring is much more possible to secure.
  • This practice allows the company to receive the money it needs much more quickly than waiting for the customers to pay the balance of their accounts. Typically, your company should receive the money about two to five business days after your agreement with the factoring company has been finalized. Some companies even receive their money in as fast as 24 hours.
  • The money your company will receive is generally larger than the amount you can get from a business loan.
  • Invoice factoring also saves your company the effort of collecting the accounts receivables, as the work is done by the factoring company.

Disadvantages of Factoring

There’s no such thing as a perfect solution for getting large amounts of cash for a company, and factoring has its downsides as well. This is especially true if you have less than ideal customers. If they are slow to pay or if they have a dubious credit history, this can affect the fee that the factoring company will require.

Your customers must also pass the standards set by the factoring company; if they do not or if the factoring company thinks your customers are unreliable then you may receive a lower percentage of the accounts receivable up front.

But in spite of the drawbacks, factoring your invoices via a factoring company will be beneficial for your business. It will provide you a steady flow of cash that your business needs to operate and grow.

 

Factoring Company Benefits: Stabilizing Business Cash Flow

By: Chris Lanchech

 

Some businesses refuse to turn to a factoring company because they believe that doing so means they could incur more debts. But this is very far from the truth. There are many reasons why factoring your accounts receivable can be beneficial for you. Simply take the following into consideration:

factoring companies, company factoring
Neebo Capital specializes in the Factoring of invoice receivables for companies who maintain commercial accounts receivables.

 

Benefit #1: You Will Have a Starting Capital

If your client gave you a huge project, you can expect that the first few months will be quite difficult.

You won’t have any immediate funds to start with. You won’t have cash for orders, employee benefits and incentives, and production expenses. Most of the time, businesses take out a loan just so they can get started with work. But with the help of a factoring company, you’re getting paid for your work quickly. In a way, it’s like the client has already paid you 80% in advance.

 

Benefit #2: You Get Your Money Fast

Have you ever tried getting a business loan from a bank or a credit union? It could take two months for a loan of $60,000-$100,000. When you turn to invoice discounting the procedure usually takes no more than five days. In just five days you’ll have your invoice purchased and the money deposited to your bank account.

 

Benefit #3: Credit History is Not a Factor

A new business will not have good credit standing. This is because it has little to no credit history to show. A business starting to fall off the grid will have weak credit scores to provide. In both cases, getting approved for a loan can be tough. However, factoring businesses do not look into credit history. Instead, the company will assess the value of the open invoice and of the client that is going to pay for it. This means that a small or new business that is still thriving or a company already leaning towards debt can still get money up-front to regulate cash-flow and stabilize its finances.

 

Benefit #4: Having a Wealth of Funds in Preparation for Seasonal Demands

As months go by your business will see a flux in demands. If you put out several or all of your open invoices for account receivable factoring you will have a steady supply of cash right from the start to prepare you for these issues. You never want to be caught off-guard and factoring invoices is a sure-fire means of being prepared, financially.

 

If you need immediate cash without suffering from the downfalls of a bank loan, approaching a factoring company is a very smart – and in many ways the best – option you can turn to. Check out the various factoring companies online and decide which among them will offer you the best deal.

An Introduction to Factoring Invoices

By: Chris Lanchech

Factoring invoices is one of the things any business will need to continue operations and growth despite seeing financial instability caused by slow overturns and residual returns. It can be very difficult for your business to progress while you are still waiting for your clients to pay. Wouldn’t it be great if all your clients could pay you immediately? That might seem impossible but with factoring you can make it happen.

 

What is Factoring?

Factoring, also referred by some as invoice discounting, works much like a regular loan except in this case you are considering your invoice or accounts receivable as the ledger. The factoring company will consider your invoice and upon reaching an agreement will lend you the amount that you will be paid by your clients. Consider the example below:

An IT company was requested by a marketing company to develop a dynamic website and overall the payment was to be for $150,000. The IT company, needing resources to start with, factors the invoice with a factoring company. They lend the IT Company 80% of the accounts receivable (in this case it will be $120,000). They will only give the remaining 20% when the client pays the IT Company. The $150,000 that the IT company receives will then be paid to the factoring company, less the fees that the company will have to pay, such as interest fees and administration fees.

Is It Beneficial to You?

Every small or growing business requires liquid cash if they desire to move forward. A business cannot rely solely on their own minimal funds while working towards their accounts receivable, lest they fall into stale debt.

First of all, one has to consider the fact that factoring invoices yield more immediate cash. Most factoring companies lend up to 80% up-front. Banks will usually only agree to give you 50-60%. This means that you can get more resources to get cash flow back in order.

 

Secure Your Business’s Finances

You might be wondering about the likelihood that your client turns bad and does not fulfill the agreement and your invoice is left unpaid. In this case most companies have insurance offer that remedies the problem. They will still give you the full amount of the loan and they will be the ones to chase after the client to get the payment owed.

 

If you are still starting with your business or if you are in need of steady cash flow to finance your company’s expansion then factoring or invoice discounting may be your best solution yet. The process yields higher immediate cash-payback than what banks offer and you can get approved in 3-5 business days.

Processing fees, interest rates, and miscellaneous fees are much lower than what you’d expect and you can even avail of insurance to protect you in case your client defaults on the payment. Getting your cash flow in a steady rate is crucial for your business’ growth and factoring invoices is a much better, faster, and efficient means of achieving this.

Credit Insurance Policies on Receivables

So you have a business and you sell to clients on credit terms. Maybe you should consider credit insurance policies on your receivables. Why?
Credit Insurance Policies on Receivables
The simple answer is to reduce risk, and strengthen your businesses financially in order to establish a stronger bankline in the future.

However the deeper answer has to do with your business and its potential loss. The saddest stories in the factoring world come from businesses who lose their largest accounts overnight.

These accounts can be large fortune 500 companies with sound financials.However one bad press release or shock to the economy can have a trickle effect and bring their business to a halt. A perfect example of one of these unforeseen chain reactions, was the filing of bankruptcy of one of the largest food processing companies in the industry.

All it took was one massive press release about the “pink slime” found in processed hamburger meat and The King of Prussia,  a PA-based food processor was devastated. Prior to the release the company processed about 500 million pounds of beef annually!

Now imagine if you are a suppler for this company with over $50,000 or $100,000+ in outstanding A/R. Prior to the pink slime press release you may have not been worried. The King of Prussia may have been one of your largest and secure accounts. However you now can see how quickly things can change in today business environment.

why should you buy credit insurance?

Had suppliers had credit insurance policies for their large customer “the king of Prussia” they would have recovered $0.80 to $0.90 cents for every dollar they were owed.

Sometimes – and this is the reason for credit insurance – there are unforeseen factors that influence the performance and survival of your customers.  Whether those are the court of public opinion, mismanagement, or a bad acquisition, companies go bankrupt, leaving you and your company paddling up shits creek.

Visit Neebo Capital for Credit Insurance Policies on Receivables