Medical Coding Factoring Terms

When a medical coding service is considering selling their receivables to a factoring firm, it’s important to familiarize themselves with some common factoring terminology. This is a quick reference guide outlining some of the more commonly-used factoring terms to help medical coding business owners navigate seamlessly throughout the entire factoring process.

ACH (Automatic Clearing House) – One method factoring companies use to electronically transfer funds into an Account Creditor’s account. When an ACH is initiated, the funds are made available electronically in the Account Creditor’s account on the next business day.

Account Creditor – You, the client and provider of medical coding services.

Accounts Receivable – The money that is owed to an Account Creditor for the services it has provided to customers on credit. The amount indicated on an issued invoice.

Advance Rate – Money provided immediately to the Account Creditor-expressed as a percentage of the total invoice amount. Frequently, factoring firms advance between 70-90% of the invoices it buys.

Account Debtor – The purchaser of medical coding services who is responsible for paying the invoice, (a.k.a. your customer.)

Cash Flow – The measurement of cash coming into a company via accounts receivables and cash going out of a company via accounts payable and payroll.

Collateral – An asset that is promised or given to a funder to guarantee the discharge of an obligation by the Account Debtor.

Discount Fee – A fee assessed by a factor that purchases accounts receivable. Traditionally, the discount fee is determined by the size of the invoice, the length of time it takes to collect the funds and the creditworthiness of the customer.

Face Amount or Face Value – The total amount of an invoice.

Medical Coding Factor – A company that provides operating capital to businesses through the purchase of their invoices.

Medical Coding Factoring – An alternative financing arrangement, in which a factor purchases the accounts receivables of a company, advances a specific percentage of the invoice immediately and then collects on those invoices.

Medical Coding Invoice – A legal debt instrument which indicates the amount due from a customer to pay for delivered medical coding services.

Non-Recourse - The period of time in which the accounts purchased by the factor remain the factor’s accounts and do not revert to the Account Creditor if unpaid due to an insolvency event. The factor accepts full credit risk for any and all accounts that it purchases during this period.

Notification – The process whereby the factoring company communicates to an Account Debtor that an invoice has been purchased from the Account Creditor and that the Account Debtor is to pay the factoring company directly.

Recourse – The period of time in which accounts purchased by the factor are able to revert to the account creditor if unpaid due to an insolvency event. The client accepts full credit risk for any and all accounts that it sells to the factor during this period.

Reserve – Amount of money that is not immediately provided to the company factoring its accounts receivable when the account is purchased by the factor, expressed as a percentage of the total invoice amount. (Advance Rate + Reserve = 100% of Total Invoice)

Reserve Release – The Reserve, minus the discount fee, is transferred by the factor to the client after payment is received.

UCC (Universal Commercial Code) – The laws dealing with commercial business.

UCC-1 – The financing statement (Form UCC1) filed to perfect a security interest in named collateral.

Keeping this medical coding factoring terminology guide close by during conversations with factoring firms will help medical coding business owners better be able to speak and understand the “factoring language.” Using this article as a reference also allows medical coding business owners to save time by focusing on asking the right kinds of questions to locate the best medical coding factoring firm for their company.

Philip Cohen is the founder and president of PRN Funding, LLC, which is an extraordinarily focused niche player in the medical coding invoice funding market place. Through a process known as factoring, PRN Funding provides business owners with the financial resources needed to grow and effectively compete in the industry. With no minimums or fixed terms, PRN Funding provides medical coding agencies with flexible and immediate access to capital. We give you the freedom to factor what you want, when you want, whom you want, for as long as you want. Prior to founding PRN Funding, Mr. Cohen was an executive officer of The MRC Group, a national provider of Medical Transcription Services. Contact Philip Cohen at toll-free 866.776.5407 or via email at pcohen@prnfunding.com. Please visit PRN Funding, LLC on the web at http://www.prnfunding.com/

Article Source: Ezine Articles – Medical Coding Factoring Terminology

Why Use Spot Factoring?

Spot factoring lets a business raise working capital by receiving an advance on just a single outstanding invoice. Here are 3 reasons it is effective to offer spot factoring to clients, as shared by Steve Ontiveros of Resource Business Partners, Inc. Read more

Factoring Conference and Workshop Schedule

Searching for training and networking in the accounts receivable factoring industry?  The International Factoring Association (IFA) has announced their conference and training courses for 2010.

These training courses provide factoring brokers, funders, and investors opportunities for ongoing education and networking in the world of invoice factoring. Mark your calendars for these upcoming events: Read more

How To Make Money and Earn Fees in the Cash Flow Business!

Many people have heard about the cash flow industry but don’t really know how the average person can profit from it. There are basically three methods for handling the fees paid to cash flow brokers or consultants, as follows:

1. Referral Fee
2. Establish Your Own Fee
3. Set Commission Fee

1. Referral Fee

Pros: Very Little Paperwork/Time.
Cons: Typically smaller commissions.
Cash Flows: Just about any cash flow can be “referred.”

The Referral Fee structure is the easiest, particularly if you already have a full time job and you have limited extra hours in the day.

With the Referral Fee structure you simply find a deal and refer it on to a Funder or Master Consultant that accepts referrals.

For the most part, you have no or very limited paperwork. You fill out a worksheet stating the person’s name and info about the cash flow. Once that information is sent, you are pretty much done. The funder will do all the work and if the deal closes send you a referral fee.

2. Establish Your Own Fee

Pros: Greater control, greater fees
Cons: More Paperwork (but not overwhelming).
Cash Flows: Mortgage Notes, Lottery Winnings, and Structured Settlements

The Establish Your Own Fee method takes a bit more work than the Referral Fee method but may double or triple your income.

With the Establish Your Own Fee method you will still fill out the worksheet but you will work with a couple funders to get the best “net” price from them. Once you have a “buy” number from a funder you simply subtract how much you would like to make and offer the seller something less.

How much less is up to you. On some deals you may only make $500, while on other deals you may make several thousand. It really depends on how much the seller needs and your negotiation skills. In the end, you are trying to find a fair price for your time and the seller.

Once the seller has agreed on a price, you will need to send the seller a contract agreeing to the terms. Typically the seller will not know your fee but that information will certainly need to be shared with the Funder (how else can they mail you check?!).

Depending on the type of cash flow deal, you may need to handle and/or pay for some of the due diligence, like an appraisal or title work for a real estate note.

3. Set Commission Fee

Pro: Potential Residual Income, Funder Does Most of the Work.
Con: Some ongoing follow up may be needed.
Cash Flows Include: Factoring Receivables, Delinquent Debt, and Pre-Settlement Lawsuits

A favorite among cash flow consultants is the ability to create residual income. Some cash flows, such as Factoring, do not allow the consultant to determine his or her own fee.

The cash flow consultant gets a “percentage” of what the Funder makes on a monthly basis. This percentage is established in advance.

Not all Set Commission Fees are ongoing. Some insurance based or delinquent debt fees are set and not reoccurring (a one-time purchase) – but the commissions can be very attractive.

There are also ways to create ongoing income on some cash flows such as mortgage notes using methods such as the “Buy Full, Sell Short” strategy using the partial purchase.

For the most part, which fee structure you use will be determined by the type of cash flow or the Funder. Given enough time in the industry you will realize the benefit of each of the ways to earn income!

Level the Playing Field by Learning How to Use a Financial Calculator

You may have walked out of meetings with bankers, accountants, and CPA’s thinking you were at a “financial disadvantage” as they danced their fingers across a financial calculator and reported their results.

You may have even wished you could “crunch the numbers” yourself for peace of mind or to make sure no one was taking advantage of you.

If either of those situations sounds familiar, then you need to learn how to use a financial calculator. Read more

Small Business Factoring Success Story

Do you ever wonder what people who are now factors used to do before they became factors? The diversity in backgrounds is fascinating and in this article, small factor Jeff Callender chats with colleague Don D’Ambrosio of Oxygen Funding, Inc…and uncovers some intriguing personal – and national – history.

Jeff Callender: As an author and trainer of small factors, over the past year I have received many phone calls from people presently or formerly working in the mortgage industry who have been considering factoring as a new career.

I realized it would be both interesting and educational to have a conversation with someone once involved in the mortgage industry for many years – and who made the jump. In this interview you’ll find his perspective on both worlds, and discover what his life is like now as a smaller factor. Read more

Delinquent Debt – How to Make Good Money With Bad Debt!

For better or worse, the United States economy runs on debt. In fact consumer credit alone totals over 2.4 trillion dollars (Federal Reserve August 2009 statistical release). That doesn’t even include the big-ticket items like mortgages, commercial debt, and business loans!

Now think about the state of the economy and the never ending reports on delinquencies, slow pays, and bad debt. If you are looking for the opportunity in this dismal economy…. think delinquent debt!

Sound crazy? Think it through: Read more

Learn to Factor Government Receivables

The federal government is spending more than ever in the struggling economy with government contracts on the rise.  Contractors working with the government are eager to access working capital by factoring government receivables.

The International Factoring Association is offering a training class on Factoring Government Receivables. The two-day event will be October 15 & 16, 2009, at the Mandalay Bay Hotel in Las Vegas, NV.

Kwesi Rogers, Principal and President of Federal National Payables, Inc., will be one of the lead instructors.  He has financed over 200 small and emerging government contractors and offers insight on how to successfully factor government receivables.

Registration is available online through factoring.org or call 1-800-563-1895.

For more information on the factoring government receivables be sure to read the FactoringInvestor.com post on How to Obtain and Factor Government Contracts to Cash in on the $787 Billion Recovery Package!

PRN President Appointed to Factoring Association Advisory Board

CLEVELAND, June 4 /PRNewswire/

In May, Philip Cohen, president of PRN Funding, LLC, was one of six selected to the International Factoring Association Advisory Board.

As a new board member, Mr. Cohen will be asked to provide guidance and feedback to the association’s executive director, Bert Goldberg. Together with the other board members, Mr. Cohen will also be responsible for communicating up-to-date factoring industry information to the entire International Factoring Association (IFA) membership base.

“I’m honored to be given the opportunity to help shape the International Factoring Association,” Mr. Cohen said. “I’m eager to get started.”

Founded in 1999, the mission of the IFA (www.factoring.org) is to disseminate information to the factoring community in regards to developments and changes in the factoring industry and to provide a forum for educational meetings and seminars.

“The IFA is the largest association in the world available to the factoring and commercial finance industry,” said Mr. Goldberg. “The newly appointed advisory board members were selected to help shape future endeavors for the association.”

With years of experience in healthcare services, PRN Funding has a precise understanding of the unique challenges within the demanding business of serving vendors to healthcare institutions.

PRN Funding, LLC is an extraordinarily focused niche player in the healthcare invoice financing market place. Through a process known as factoring, PRN Funding provides business owners with the financial resources needed to grow and effectively compete in the industry. With no minimums or fixed terms, PRN Funding provides healthcare agencies with flexible and immediate access to capital. PRN Funding gives you the freedom to factor what you want, when you want, whom you want, for as long as you want. Prior to founding PRN Funding, Mr. Cohen was an executive officer of The MRC Group, a national provider of Medical Transcription Services.

PRN Funding, LLC is on the web at http://www.prnfunding.com

Single Invoice Factoring Provides Cash Flow for Small Businesses

FROM MARKETWIRE

May 13, 2009 BETHESDA, MD 

The Interface Financial Group (IFG), North America’s largest alternative funding source for small business, reports instances where invoice factoring, when a business sells its accounts receivable invoices at a discount, has helped a company stay in business in the midst of the current global economic downturn.

A recent report by BizBuySell.com, which tracks the health of small business, indicates that there has been a decline in business-for-sale transactions and valuations. Additionally, the number of closed transactions reported in the first quarter decreased by 36 percent as compared to the same 2008 time period. As many small business owners across the country are struggling, many looking for answers on how tough times are affecting the value of their businesses. Read more

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