Small Business Finance – NeeBo Capital Blogs

How a Top Factoring Company Can Help You Run Your Medical Clinic

Running your own medical or dental clinic is a huge undertaking, and usually you can’t go at it all by yourself. Not only will you need employees, but eventually you’ll need more funding especially if you plan to grow your practice. For many healthcare professionals, a top factoring company may be of better use than a bank in securing the funding they need.

Banks take too long. Banks nowadays are very cautious about lending money to a small business. Even if you do qualify for a business loan (and that’s a big “if”), the entire application process takes an interminable length of time. The bank will ask a lot of questions. The bank will take a very careful look at the state of your finances, how you plan on using the money, and how you plan to repay the loan.

In contrast, a factoring company takes a shorter time to decide on medical business factoring loans. And they’re also much more likely to provide the funding you need.

You can use the advance money for growth. In factoring, you get most of the money upfront from the factoring company, instead of waiting a long time for the payment from your customer. And you can do a lot with that money. You can make sure your people get paid on time, and that you have the working capital to cover various expenses necessary to run a medical clinic from day to day.

You can also use the money to get more advanced equipment. For example, if you’re running a dental clinic you may wish to offer advanced computer imaging technology so that you can offer state of the art aligners such as Invisalign. You can also expedite the production of crowns so that it only takes a single visit to the clinic. You may even offer dental implants to replace missing teeth, instead of just ordinary dentures.

Your clinic may also benefit from additional advertising as well, and you can use the money to improve your clinic’s website.

You get extra services. It’s not just the funding through which a factoring company can help. Essentially, they can handle your invoices for you, and you can check up on them easily online. The factoring company can organize your invoices to see which payments are due and how much you’re going to get in the future.

The factoring company also deals with the third-party insurance companies, along with Medicare and Medicaid. Dealing with these institutions is one of the most frustrating aspects of running a clinic, and now you’re spared from the trouble. You can now concentrate on providing the best care you can for your patients, which is probably why you became a doctor in the first place!

As a doctor, you’re sworn to help people get better, and that’s what you’re trying to do with your medical clinic. But let a top factoring company help you, so that you can provide even better service to your patients.

Looking for a Staffing Company Loan? (Tips )

When you run your own staffing company, it’s not always easy to monitor everything that’s going on. Things can slip down the cracks, and you may end up s in need of a staffing company loan. It may help your staffing company cash flow if you try to automate the billing process, however.

But how do you do that? Here are some suggestions offered by experienced business owners:

Hire an Accountant

Or you can outsource the entire billing process to an accounting firm. You have to admit, if you’re running your own business that doesn’t mean you’re going to be a great accountant. As the owner and manager of a staffing company, you may have been a people person who’s always delighted in seeing people find employment, and not exactly a dedicated number-cruncher.

By hiring an accountant, you spare yourself many hours of work on your billing and accounting. These things can be a distraction, when you have more important things to do which are much more suited to your skills. You can then concentrate on finding new clients for your workers, providing their training, and making sure they have all the supplies they need to do their work properly.

Synchronize Your Billing System with your Accounting System

If you insist on doing the accounting yourself, or if there’s no budget for an accountant, the least you can do is to make sure your invoicing and billing system is set up properly with your accounting platform. All the data must fit and complement one another, and all your accounts must reflect the current state of affairs.

By synchronizing your invoicing and billing with your accounting system, you save precious hours of work. What’s more, you get a more accurate idea of your company’s financial state, and you minimize the chances of error.

Be Updated with the Latest Technology

Regardless of what billing and accounting software you use now, every now and then you should go online and check out new tools available. When it comes to accounting software, things are always changing and improving. Even though you may have to learn an entirely new process, the new technology may represent a much better way of doing things for your accounting. You can’t just keep on using the same old programs.

Make It Easy for Customers to Pay

If possible, get a platform that allows your customer to pay automatically through online or mobile means. When you can accommodate a variety of payment methods, you give your clients fewer reasons not to pay on time. Making things easy for your customers benefit you as well.

Don’t Forget to Add a Personal Touch

Instead of sending cold collection mails and payment reminders, you may want to use a more friendly personal emails instead. It’s been demonstrated that often a personal email is much more effective in encouraging customers to stay on track than a coldly professional automated message.

It’s not unusual for your business to need a staffing company loan every now and then. But by automating your billing properly, you may not need a loan as often as you think.

Your Pricing Strategy Affects Trade Receivables Financing

If you’re in need of some quick cash infusion for your own business, you may want to think about accounts receivable factoring instead of applying for a bank loan. Factoring is a form of trade receivables financing. You get an advance on the value of your invoices, which you can then use right away as working capital. Small business factoring companies can offer you as much as 80% of the value of an invoice, and then charge you a very small percentage as fee for the advance.

Since your funding relies on the value of your accounts receivable, you really need to make sure that you’re pricing your products and services correctly. But how do you determine the right price for goods and services? Here are some pricing strategies you may want to think about.

Cost-Based Pricing

In any business, you earn money when you receive more money than what you spend. This is also the very essence of cost-based pricing. You take note of how much you spend in manufacturing a product or providing a service, and then you add a nice profit margin for yourself when you set a price for what you offer.

The key here is to be very aware of how much you actually spend on costs. Maybe you spent money on research and development. You also have to take note of various ordinary expenses such as rent and utilities, as well as supplies and equipment you need for your work. Payroll has to be considered too. Even after you’ve manufactured your product, you will also have to consider just how much money you will spend on advertising to promote that product.

This is a great way to price things—if you offer a product or service that the consumer base wants.

Competition-Based or Industry Standard Pricing

Here you look at the prices normally charged by your competitors and then you determine your own prices based on those figures. Normally this means you price your products lower so that you can brag that you offer more affordable goods and products. This is actually a very easy way to get the attention of many prospective consumers.

The problem here is that you still need to think about your own costs so you don’t end up losing for each sale. If you’re spending a total of $1,000 to create a single doodad, then offering it for $9o0 means you’re selling it at a loss. Some large corporations can absorb this kind of loss because they just want to grab market share and make a brand more popular, but for a small business this can be a problem.

Customer-Based Pricing

When there’s a great demand for a product, you can raise prices in order to gain more profit. There may even be a boost in your brand’s image. Many people see the price tag as proof of quality. If they see that something is expensive, then they automatically think that it must be good. Many exclusive universities set their tuition this way, as a way to discourage more than 75% of their applicants. Luxury bags use this type of pricing too.

Whatever pricing strategy you use, just keep in mind that it will affect your trade receivables financing as well!

Top 10 Reasons Why Small Business Factoring is Increasing

Small businesses are now turning to factoring as a more viable way of getting funding. While there are several drawbacks (it seems more expensive than getting a traditional bank loan), small business factoring offers numerous advantages. Here are 10 of them:

You’re more like to get the funding you need from a factor than from a bank. Community banks are becoming fewer, while big banks deny almost 80% of all loan applications from small businesses. Meanwhile, it’s very easy to find a factoring service online that’s willing to provide you with the financing you need. This is true even if you’re a new company or you have bad credit.
The loan application doesn’t need a lot of effort. With banks, you need to prepare a lot of paperwork to prove that you’re a good business to lend to. But factors only investigate creditworthiness of your customers.
The loan application only takes a short time. In fact, some factors may only take as long as 48 hours to decide if they will be financing your company. That’s a vast improvement over the months it takes to complete a bank loan application.
You’re not required to personally guarantee the loan. Some banks even require you to put up your personal assets for your business loan, but this is not necessary for small business factoring. You only need to guarantee against disputes or fraud.
The financing is not considered a loan. This makes your balance sheet look more attractive, which will be important if you’re selling equity or trying to obtain other sources of funding.
The factor takes care of monitoring the invoices and collecting the payments. This frees you up from the overhead costs of maintaining a department for such a purpose, and you can concentrate on running your company. The factor can usually collect the payments in a professional manner.
You can get credit info on your customers. As have been mentioned, the factor investigates your customers, so you will find out which of your new customers are likely to pay within 30 or 60 days. This may prevent you from offering terms to customers with a history of not paying in full or on time.
Your financing grows as your sales increase. This means you can easily fund your business growth. Factoring involves getting an advance based on your invoices, so the more money involved in the invoices the more money you can get in advance.
You can pay off your suppliers early and get discounts in exchange. Also, your improved cash flow can allow you to buy greater volumes of supplies which can get a discount as well.
Your customers may be encouraged to pay on time. That’s because some factors report to credit agencies. And if your customers are aware of this, they may wish to pay on time to improve their credit rating.

These are just some of the advantages of small business factoring. So if you’re running your own business, you may want to consider factoring if your local bank is making it difficult for you to get the financing you need.

How to Use Factoring to Get More Business

A lot has changed in the business landscape in the last 10 years, and analysists have reported that invoice factoring and cash advance sectors are increasing in popularity and momentum, growing at a double-digit rate each year. The market for factoring, wherein businesses take out a cash advance against their invoices, is even greater with Morgan Stanley stating the industry makes as much as $15B per year.

Why Factoring for Small Business is a Practical Option

With such a significant rise in popularity, one would have to wonder what makes cash advance services very attractive to small business owners. The reason for this phenomenon is not actually hard to comprehend. First of all, factoring is so much easier to obtain compared to bank loans. Banks usually check the length of history of the business, the amount of collateral needed and the payment terms of the loan, and many small businesses have not been around long enough to meet their criteria.

In addition, most traditional sources can only help borrowers who want to apply for long term loans (ie. 5 to 10 years). If you need credit and want to pay it off within 3 months to 3 years, banks usually won’t be able to help you.

How Factoring Works

There are many factoring companies online right now and they follow the same basic principle. If a business is having difficulty meeting cash flow, they can turn to a factoring service to get a cash advance so that they can continue their daily operations and even fund their expansion.

Factoring companies are very useful when it comes to short term cash advances and they provide “loans” of as much as 90% of the amount in the invoice. These alternative lenders, in turn, charge a “fee” for the service, usually a percentage of the invoice in addition to collection and management fees, if applicable.

When to Turn to Factoring

One important thing about factoring that a business needs to understand is that it’s not cheap at all but it’s also no more expensive than taking out a credit card cash advance. In fact, it’s probably cheaper and it also gives you the added benefit of not having to collect payments from your clients. Some factors even save you the hassle of doing credit checks on your clients because they can do it for you as part of their service.

But to ensure that you choose a trustworthy and honest factoring service, you have to take some precautionary measures.

Choose a factoring service that really understands your business. Do business with one that has a high level of understanding of how your business works and the processes you employ so you can stand to benefit most from the partnership.
Pick a funding partner with a consistent and guaranteed source of capital.
Examine the terms of the transaction. Check the interest rate and fees and compare the numbers with what other funding providers are offering.
Get a copy of the contract and read it in advance (before signing on the dotted line).
Scrutinize the management team, find out how long the company has been around, and ask for customer references.

Factoring as a financing option for a startup business has proven to be very useful not only to keep the company afloat but also to help them grow. With a steady cash flow, there’s nothing that will stop you from increasing your revenue and taking advantage of every opportunity you can get to make more money.

Who Can Benefit from Medical Factoring Companies?

In any type of business, there is always the need for sufficient funding. Without it, the business simply cannot survive. But such reality is even more evident in the health care industry, where many businesses operate on very limited capital. This is because businesses like medical clinics and hospitals are often paid through insurance claims, which take as much as 120 days to pay up. Such delays create substantial cash flow problems for health care providers who have daily overhead expenses to take care of.

What is Medical Factoring?

The rise of medical factoring services is welcome news for businesses in the health care sector. Medical factoring solves cash flow problems by providing you with ready cash that you can use in any way you deem necessary while you wait for your payments.

Medical factoring companies usually do not have stringent requirements. They will only evaluate the credit-worthiness of the insurance company to whom the insurance claims were filed, and once that is established, they will immediately give you an advance against the claim. Simply submit your approved claims to the factoring service, and they in turn, will advance as much as 80% of the claim. Once the claim is paid, the factor then gives you the remainder of the payment minus their fees.

Pros and Cons

The single most crucial benefit of opting for medical factoring is that it solves your cash flow problem. Now, with their help, you don’t have to worry about when insurance companies will pay you. You can get your much needed capital resources in just a few days, instead of months.

Another benefit of choosing this alternative form of financing is that it gives you flexibility. While it is possible to get a line of credit from the bank, you can simply use medical factoring to give you the funding you need not just to stay afloat, but even to grow and expand (or to down-size if necessary). You get to choose which (and how much) of your approved insurance claims you can submit for factoring.

But of course, while it can literally be “life saving,” factoring not exactly without drawbacks. For one, the fees can be higher than what banks and other traditional lenders would charge. So before opting for it, see to it that you have a good understanding of the terms and fees of the medical factoring service.

Who Can Apply for Medical Factoring?

Medical factoring companies usually offer financing to the following:

Hospitals
Physicians
Home healthcare companies
Nursing homes
MRI clinics
Laboratories
Physical Therapy/Rehabilitation companies
Radiology centers
Medical equipment providers
Ambulance service providers

Approaching medical factoring companies is especially practical for startup businesses that don’t have credit history, which is a standard requirement for bank loans. Factoring is also suitable for those who need financing to make payroll, those who want to expand their business or buy new and expensive equipment and machines. To get the most benefit from medical factoring, always choose a factor with extensive experience dealing with health care businesses.

Should You Factor Your Receivables?

Factoring is one of the more convenient ways to get additional funding to help a business get through difficult time or to take advantage of market opportunities. This financing option is not a loan. Essentially, factoring involves selling your accounts receivable so you don’t have to wait for the receivables to mature (usually 30 to 60 days) before you can get your money. Instead, when you factor receivables you can get as much as 80% of the value of the receivables in a day or two. The rest of the funds will be given to you when the customer pays in full.

So if you need money, is factoring a sensible option for you? Here are some of the indicators:

You have bad credit or you don’t have collateral. A stellar credit and collateral are what your bank will require from you if you ask them for a loan. But if you don’t have good credit and you have nothing to offer as collateral, you’re out of luck. In contrast, factors only care about the credit of your customers, and the receivables will serve as collateral.
You need the money ASAP. You should just factor receivables instead of applying for a bank loan, because bank loans just take too much time. Banks are meticulous with paperwork because they want to be assured that you can pay off the loan plus interest, on time.

On the other hand, factors don’t really like delays. It may take a week or so to investigate the credit worthiness of your customers, but once you have a factoring line set up and your invoices are factored regularly, you can get the money you need in a day or two instead of waiting 30 or 60 days.

Your accounts receivable collections are on a different schedule compared to your expenses. Factoring gets you your money right away, which can be a great help when you need to pay your employees on a weekly basis.
You only have few receivables involving large amounts instead of numerous invoices with small amounts. Usually, there is a fee for each account receivable factored by the financing company. So it’s better to consider factoring if you have a single invoice worth $100,000 rather than a hundred invoices worth a thousand dollars each. In the latter scenario, that involves a hundred fees in total.

So if you’re a retailer, factoring may not be for you. If you’re selling medical devices, for example, it may be better if you’re selling a large volume to hospitals than if you’re selling small ticket items to dozens of small clinics in the area.

You want to take advantage of the extra services offered by factors. Factors investigate your customers and identify which ones are creditworthy and which ones are not, so you will know which among your customers should be given term payment options. Also, factors take care of the collection, which means you won’t have to set up a separate department for it.

If all these things apply to your business, then you’re an ideal candidate to factor receivables instead of getting a bank loan.

Factoring Accounts Receivable: How It Works

In most cases, a business that needs an infusion of cash right away to help them get through a difficult time or to foster expansion will go to a bank for a loan. But if your customers are businesses as well, then you may want to think about factoring your accounts receivable instead.

Here is how it works:

The purpose of this financing option is to free up your cash flow instead of having the money tied up in your accounts receivable. This method essentially “sells” your ARs to the factoring company, instead of getting a loan.
Initially, the factor’s main concern is that your customers are creditworthy so that they know the invoices you issue will be paid in full on or before the due date. The factor’s research can be very helpful in helping you identify which among your customers can be trusted to pay promptly.
Once your factoring set up has been finalized, you can send the factor a copy of the invoice. Usually, this invoice will specify the amount owed by the customer and also when the payment is due, usually in 30 days or 60 days.
Instead of having to wait for that money, you can get a sizable percentage of the money immediately. It all depends on your agreement with the factor, but on average you can get about 80% of the value of the account receivable upfront.
The remaining 20% will be sent to you once the customer pays in full. The factor takes over the management of your accounts receivable, and they do the collecting as well. The customer pays the factor directly, and then they pass on the rest of the payment to you after they have taken their fees.
You can then use this money for any of the most pressing needs of your company. You can pay the salaries of your workers, cover the operating costs, pay your supplies, or improve your business by doing renovations or buying new equipment. Factors usually don’t care what you do with the cash advance, unlike banks who want to know what you wish to do with the loan proceeds.
The factor doesn’t just advance you the money against the accounts receivable. They process your receivable as well. Essentially, it’s as if you are outsourcing your accounts receivable processing and collecting to a third party.
In some situations, all accounts receivable may be part of the factoring arrangement. But it may also be possible to only choose certain invoices for factoring.

As you can see, it really is very simple. Factoring your accounts receivable is a much faster process and much more likely to get approved than getting a bank loan. And getting the funding you need does not affect your current credit, nor are you required to put up your personal assets as collateral.

Screening Unsuitable Small Business Factoring Companies

Factoring can be a lifesaver for companies struggling with working capital issues. Small business factoring companies can also enable your company to grow by giving you the capital you need. It is much easier to set up a factoring agreement than to get a bank loan, and the entire application process takes only days instead of weeks or months.

The way factoring works is simple enough. You sell your invoices to your factor, and in return you get a cash advance right away, at around 80% of the value of the invoice. The rest of the payment comes to you when the customer pays in full and after the factor takes its fees.

But while factoring can be a very helpful funding tool, not all small business factoring companies are equal. Some factors are more suitable for your business than others.

Do You Fit the Requirements?

Like banks, some factors have specialties and preferred customers. For example, some factors specialize in medical factoring or in construction. They have the experience working in these fields and they know a lot about the details of the industries they cover. So if you’re not in any of these industries, then its better for you to consider other options.

Other factors have minimum or maximum funding requirements. For example, some may require a minimum of $250,000 in total invoice value, while others can offer funding of only up to $50,000.

What Are the Advances and Fees?

Some factors offer the typical 80% advance while offering lower fees as a come-on. Others offer 90% advance or even more, although their fees for their funding can be anywhere from 1 to 6 percent. It’s up to you whether the higher advance rate or the lower fees are more important. If you’re really lucky, you may even find a factor that offers a high advance rate and low fees.

The first thing you need to look out for is the transparency of the rates. The best small business factoring companies tend to spell out their rates clearly on their websites. Others make the information more obscure, and some even trot out misleading information about their rates. You need to know about all the hidden fees involved so you can compare the rates of the factors you’re considering.

You should also take note of the penalties for late payments. Some penalties can be rather harsh.

And then there’s also the matter of long-term contracts. Some may lock you into a factoring agreement for 2 years, charging exorbitant fees should you opt out. But others may not require contracts, and some even allow you to pick and choose which invoices they can factor.nsuitable Small Busine

Reputation Matters

This can be a very subjective aspect to consider, but nonetheless it’s important. So perhaps you may want to check out some finance-related forums to find out how a particular factor really operates. You also need to make sure that they treat their customers’ customers fairly, because in most cases they oversee the payment and collection process.

It’s undeniable that factoring can be invaluable to your business. Just remember to pick the right factor, because unsuitable small business factoring companies can create more problems instead of solving them.

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Non-Recourse Factoring: What is It, Exactly?

Need Non-recourse Factoring? Call 1-888-382-3766 or visit our main site for an instant quote by clicking here

Factoring is fast becoming a very popular funding option for small businesses today. In factoring, you sell your invoice to a factor and in return you get a cash advance, which is typically about 80% the value of the invoice sold. When the customer pays in full, the factor then sends you the rest of the payment after deducting its fees. But sometimes a customer doesn’t pay at all, and that’s where recourse and non-recourse factoring comes in.

The Typical Factoring Agreement

Most of the time (79% of the time, according to a 2009 International Factoring Association survey), the factoring service you get is the recourse type. Part of the agreement states that after a given time (from 60 to 120 days), you are contractually obligated to buy back the invoice from the factor. To prevent or minimize this from happening, factors always investigate the credit history of your customers. But the factor will be paid its money, one way or another.

Since this type of factoring agreement offers the least risk to your funder, the fees involved are much lower compared to the fees involved in non-recourse factoring.

Clarifying the Meaning of “Non-Recourse”

At some point in history, factoring was essentially a sale of invoices and factors took all the risk. Factors accepted the loss when the customers didn’t pay, which is why credit investigation and payment collection are integral aspects of the services they provide.

Today, that’s no longer the case, but non-recourse factoring is still offered. But the definition of “non-recourse” may vary depending on the factor. It is very rare for a factor to define non-recourse as assuming the risk of nonpayment for whatever reason. It’s much more common to define it as not forcing you to buy back the invoice if the customer becomes unable to pay because of bankruptcy.

Drawbacks of Non-Recourse

Because there’s an additional level of risk for your factor for the non-recourse option, you’re obliged to pay higher fees for the factoring service. But that’s not all the disadvantages. The factor may also limit your sales only to well-established customers, yet require higher minimum volume commitments. And the factor may be much more intrusive in its payment collection methods.

And you also need to keep in mind that bankruptcy is hardly the most common reason for nonpayment. Your factor may demand recompense when your customer fails to pay due to financial difficulties, because they didn’t technically go bankrupt.

The customer may have also failed to pay because of a dispute with you regarding the terms of the agreement. For example, they may declare that the goods you delivered were not in the quality or quantity specified in the contract. They may claim that the goods sent them were damaged or not good enough. If that’s the case, then the factor reserves the right to demand that you buy back the invoice of that customer.

So when is non-recourse factoring appropriate? It can act as insurance for you when the vast majority of your business comes from a handful of large companies. Since non-payment from one customer can have a very damaging effect on your business, it may be better for you to transfer the risk to the factor.