Factoring Conferences

The International Factoring Association (IFA) finished up their 2012 conference April 18-21 in Huntington Beach, CA.  If you missed the event keep an eye on the factoring.org website for the the release of the conference cds.

They have also announced the IFA 2013 Factoring Conference April 24-27, 2013 at the Fontanebleau Hotel in Miami Beach Florida. Registration will be available mid October.

Factoring Trainings

There are several factoring trainings still available for 2012 from IFA.  One of these, The Small Factors Meeting, is moderated by Jeff Callender President of Dash Point Financial.  Jeff is also the author of How I Run My One Man Factoring Company and the Small Factor eBook Series.  Starting as a factoring broker in 1994, Jeff now owns his own factoring company and shares his knowledge with others interested in the factoring business as a broker or investor.

This training is being held October 25-26th in Las Vegas NV and will also be moderated by Ryan Jaskiewicz, the founder and President of 12five Capital. The workshop is designed to give small factors a forum to discuss and learn with emphasis on round table discussion, networking and education.

Factoring News From Bibby Financial

Bibby Financial Services has announced several news worthy items in April.  The following excerpts were taken from the formal press releases.  Please visit the Bibby Financial website to read the full version of the articles.

Bibby Financial Services Provides a Group of Businesses With $3 Million Factoring Facility

TORONTO — (Marketwire) — 04/10/2012 — Bibby Financial Services said today that it has funded an Ontario, Canada-based temporary staffing company that provides staffing solutions across the light industrial and financial services sectors.

The company already has two operating units that are current clients of Bibby Financial Services. This latest addition will use the increased cash flow to stay ahead of payroll expenses — a major concern for any staffing firm.

“Factoring is a smart choice for staffing companies due the pressure of meeting weekly or monthly payrolls,” said Bob Lall, Managing Director, Bibby Financial Services (Canada). “A staffing company might have 30-day terms for payment while its temporary employees expect weekly payroll checks. Factoring bridges the gap between invoicing and receiving payments. With increased cash flow and a factor following up on invoices for its clients, a staffing company has the time and working capital it needs to take on new business.”

They have also announced a new promotion in Canada.

Bibby Financial Services Names Hardy Kang Canadian Head of Sales

TORONTO — (Marketwire) — 04/16/2012 — Bibby Financial Services announced today Hardy Kang has been promoted to Head of Sales, Canada. In his new role, Kang will develop and lead the Canadian region’s sales team while continuing to take on new business and provide small and medium-sized companies with flexible cash flow solutions. He will report directly to Bob Lall, Managing Director.

Bibby Financial is a worldwide market leader in business cash flow solutions to small and medium-sized companies. With offices in eight North American cities and 14 countries around the world, its product portfolio includes accounts receivables finance, factoring, export finance, purchase order finance,  and specialist solutions for the staffing and trucking sectors. They are also one of the factors listed in the 2012 Factoring Company Directory.

Two recent articles in CNN Money covered the ongoing small business financing challenges and highlighted one possible solution…

Merchant Card Advances

“Banks have backed away from making loans at a time when what many businesses have of value is cash flow and not physical assets,” said Slater. “That’s created a market opportunity for the cash advance industry.”

Those in the trade, such as AmeriMerchant and RapidAdvance, offer quick money with a hefty fee. Typical clients are restaurants and small shops, which take out advances that range between $5,000 and $200,000. A business owner who takes out a $70,000 advance will have to pay back $100,000. Lenders ensure repayment by immediately taking a fixed portion, close to 15%, of a sale every time a customer swipes a credit card at the shop.

Advances commonly take six months to repay and carry annualized interest rates of 104% to 177% if paid evenly every month, according to a 2009 industry analysis by consulting firm First Annapolis. Marc Abbey, an expert and managing partner at the firm, said figures are similar today.

Source: CNNMoney — Firms Turn To Riskier Financing 2/21/2012 and Small Biz Loan Demand Up, Federal Reserve Says 2/1/2012 — by Jose Pagliery.

The article went on to interview several business owners that used cash advances, including a new option from American Express that was rolled out in September. Express Merchant Financing from Amex now offers advances up to $750,000 with fees equivalent to a 6% annualized interest rate.

Other resources mentioned were Merchant Cash & Capital (MCC) and Kabbage, Inc.  MCC has been offering advances since 2005 and has funded nearly $400 million to more than 11,000 merchants. Their program requires business owners to process a minimum of $5,000 per month in credit cards.  They also offer commissions through their Independent Sales Organization (ISO) and MCC Reseller programs.

Kabbage, Inc. is a relatively new option that specializes in offering working capital solely for online businesses owners.  They support advances to online sellers using Ebay, Amazon, Yahoo Stores, Shopify, and Etsy.

How This News Relates to Factoring

Factoring involves an infusion of cash through the purchase of outstanding invoices or accounts receivables. Most factoring companies require the invoice debtor to be another business that is creditworthy. Merchant Cash Advance companies are advancing cash on anticipated credit card purchases, which often involve individual consumers or retail purchases.

So how does this news relate to the factoring industry?

1. It shows the ongoing need for alternative financing as banks continue to deny loans to small businesses.

2. It makes factoring discount rates look pretty attractive in comparison to some of the merchant cash advance fees quoted in the article.

3. It presents another potential avenue for earning income while filling a need. As a factoring broker or cash flow consultant you are likely to receive inquires from small business owners in need of working capital. Some of these companies will not be a good fit for factoring, however they might be candidates for other alternative financing options like Merchant Cash Advances. Many of these advance companies have partner or reseller programs that pay referral fees.

Want to learn more about the factoring business?

Be sure to check out the Factoring Bookstore for these informative training materials:

The Small Factor Series by Jeff Callender includes 6 essential eBooks for anyone wanting to make money with small invoice factoring and accounts receivable financing. This how-to system includes all factoring fundamentals including case studies, marketing tools, scripts, and more!

NEW YORK (Dow Jones)–Sears Holdings Corp. (SHLD) shares soared Friday as the retailer was said to be making the rounds to reassure its financing partners that it has the wherewithal and the desire to meet its obligations.

Shares were up 13% to $49.04 in recent afternoon trading, and have now gained 57% this month as positives from new financial plans with vendors mixed with talk the company could be taken over by its majority owner, Edward Lampert.

A Lampert representative didn’t immediately return a call for comment.

The retailer on Friday was said to have talked with a number of its larger factors about a new financial approach after talking first with CIT Group Inc. (CIT), a factor that pulled its funding last week amid uncertainties about Sears’s financial condition. Factors are financing firms that buy receivables from suppliers and collect the money from retailers once the goods are sold.

CIT was reported to have reinstated its financing agreement this week.

Representatives from Sears declined to comment. A CIT spokesman said the company does not comment on customers.

“Sears has come up with a financial vehicle to make factors more comfortable,” said an executive familiar with the arrangement. “There is a lot of renewed confidence in their ability to satisfy their vendors.” The executive declined to elaborate on the arrangement.

Another person close to the matter said an arrangement has been “placed on the table” and it was likely it would soon be put into effect.

Sears had tried to reassure suppliers it has adequate liquidity to operate its business, but that hasn’t done much to allay financiers’ fears, the suppliers said.

The factors were “worried about our financial exposure and that can’t be satisfied by conversations about liquidity,” said an executive at one New York-based factor. “We want shortened payment terms, more transparency into their finances, to know the value of their assets.”

Another executive of a factoring firm said he also had asked Sears for better payment terms and access to more information, but the company wouldn’t agree.

Reassuring vendors and their financial backers will be key to Sears’s future, analysts said.

-By Karen Talley, Dow Jones Newswires; 212-416-2196; karen.talley@dowjones.com. -Ann Zimmerman contributed to this article.

Read the article at The Wall Street Journal.

Typically, when I write these monthly articles for Factoring Investor, the discussion focuses on the factoring industry and ways for you to market and manage your business.

Last month’s publication, “A How to Guide for Factoring Brokers”

was a smashing success with requests for the guide from factoring brokers from all parts of the world.

We also received excellent feedback on our social media marketing for the factoring business article that ran last summer. For this year end piece I’d like to keep it simple and say thank you to the people that helped us in 2011:

• My Family – Thank you for your support and strength for without you none of this would have been possible. Thank you believing in a dream but more importantly, believing in me.

• The Oxygen Funding Team – Thank you for your dedication and for always striving to be the best you can be. No matter what the challenge was, you were always willing to step up and get the job done with no questions asked.

• Our Factoring Clients – Thank you for making our company the thriving success it is today. Double thanks for making our jobs a pleasant experience every day we come to work.

• Our Friends at Factoring Investor – A special thank you to Tracy and her team at Factoring Investor for allowing me to do this monthly piece that gives me the opportunity to spout whatever comes to mind with the hope they will find it useful and informative for their audience.

Finally, I am honored and grateful to you, the readers, who so often call and email me with great feedback. Whether it’s a comment on a past article or a suggestion for a future piece, I can always count on you to shed some additional insight on topics that are so often overlooked on my part.

Best wishes to all for a healthy and prosperous New Year.

Don D’Ambrosio is the president of Oxygen Funding, Inc., an invoice factoring company located in Lake Forest, California. For more information, he can be reached at don.dambrosio@oxygenfunding.com or you can visit his company’s website at www.oxygenfunding.com

To help alleviate your concerns and to educate your customers about medical staffing invoice funding, consider the following:

Medical staffing factors only work with agencies who qualify for credit.

Similar to getting a bank loan, staffing agencies go through due diligence before an invoice funding company will agree to purchase their receivables. If your company is able to secure financing, it is a positive sign that you operate a stable, growing business. Moreover, the ability to factor is dependent on the creditworthiness of your customers, not your own.

Medical staffing invoice funding is beneficial for both you and your customers.

Your customers are most likely accustomed to taking 30, 60 or even 90 days to pay for your staffing funding services. By factoring, you can maintain a “business as usual” relationship – your customers can continue to utilize your medical personnel and have time to pay for their shifts. The only difference with medical staffing invoice funding is that your company benefits from having money today, in order to more readily satisfy current obligations, while still experiencing growth.

Factoring is a smart business move for growing medical staffing companies.

A business most often uses financing obtained through the sale of receivables to expand and take on larger contracts, without compromising the quality of their services. By getting money sooner than later, your staffing business has the resources to focus on critical success issues – sales, operations and growth – while still meeting its demand.

Many of your customers may already deal with factors and may not be aware of it.

Factoring is one of the oldest methods of providing working capital to help businesses solve their cash flow needs. Credit cards transactions are actually the most common form of factoring used every day. Many hospitals and physicians’ practices factor their medical receivables due from insurance companies and therefore are already familiar with how factoring works and why companies choose to do it.

Educating your customers about why you decided to obtain staffing funding services should eliminate many of their concerns, and invoice funding firms are available to help explain your new financial situation. For too long, factoring was only available to large, multi-billion dollar corporations. Now there are specific invoice funding firms that provide medical staffing funding services to companies like yours, so you can enjoy both the perception and the reality of being a growing, profitable company.

Philip Cohen is the founder and president of PRN Funding, LLC, which is an extraordinarily focused niche player in the medical staffing invoice funding market place. Through a process known as factoring, PRN Funding provides staffing business owners with the financial resources needed to grow and effectively compete in the industry. With no minimums or fixed terms, PRN Funding http://www.prnfunding.com provides staffing companies with flexible and immediate access to capital.

Article reprinted with permission by PRN Funding, LLC.

With costs going up, consumers were going to have to pay more -  painting a potentially gloomy picture for holiday spending. But did this actually happen and what about the cost of factoring during this period?

(8/31/11 Source: Apparel) – A new survey of consumer goods manufacturers and importers shows that the dual trends of weak inventory sales and rising prices paint a dark picture for the upcoming holiday season. As of July 31, 2011, during which time most holiday orders are placed:

• 83 percent expect prices of consumer goods to rise this holiday season, with one-third saying prices could rise as much as 10-15 percent
• To deal with the rising cost of goods and the gloomy economic outlook, 89.4 percent expect retailers to rely heavily on discounting to move merchandise
• 64 percent of manufacturers and importers reported that retail orders are the same, or less, as compared to last year (2010)
• 30 percent of respondents reported that the increased costs to manufacture and ship goods will be passed along to consumers as compared to only 20 percent of respondents passing increased costs along to the consumer six months ago

“Inflation is coming and the era when retailers and manufacturers absorb price increases to protect consumers is over. Our manufacturing clients are telling us that prices for clothing, bedding and other soft goods will rise this holiday season. However, all hope is not lost, as one-third of those surveyed believe that despite current market challenges, retailers will increase inventories this holiday season,” said Andrew Tananbaum, executive chairman of Capital Business Credit.

Additional findings of note:

• Nearly three-fourths (73 percent) of respondents expect sales this holiday season to be the same, or weaker, than last year
• 60.5 percent believe that an increase in the cost of goods will be spread across  consumers, retailers and importers
• Half (53 percent) cited that due to the increase in raw materials and logistics costs, retailers are asking for longer payment terms during the holidays indicating that suppliers are forced to become more flexible with respect to payments and contract terms

These changes will affect margins across the board, as an overwhelming 95 percent of respondents indicated that their margins would be affected in some way.

The Global Retail Manufacturers and Importers Survey, conducted by Capital Business Credit LLC (CBC) (www.capitalbusinesscredit.com), a global integrated financial products and services company that serves the retail sector, surveyed 80 manufacturers and importers in the apparel, housewares, home furnishings, fashion accessories and furniture industries, who manufacture some, if not all, of their products in China, India, Vietnam, Bangladesh and Pakistan. The survey was conducted the week of Aug. 1, 2011.

Cotton

Almost all (95 percent) of respondents saw an increase in the cost of raw materials over the last 12 months. To combat the increased cost of raw materials, 33 percent will be replacing some of the cotton content in their products with rayon (60 percent) or Lycra (40 percent). More than a quarter (26.7 percent) of those who have high-cotton content products will vary the cut or design of their products to use fewer raw materials. Respondents also noted that cotton prices will directly affect consumer prices this holiday season.

Labor

Approximately 44 percent of survey respondents plan to move some or all of their manufacturing out of China due to the increased cost of labor. Almost three-fourths (71.4 percent) of those respondents are considering relocating some of their production to Vietnam.

Logistics

The CBC survey also identified that the increased cost of logistics – due in large part to the rising cost of oil – is a major cost concern (92.2 percent) for importers and manufacturers. Almost two-thirds (66 percent) of respondents said that logistics costs have increased by more than five percent in the last 12 months with nearly 58.3 percent of respondents citing an increase of five percent or more due to the current cost of oil.

“The rising costs of raw materials, labor and logistics only magnifies the existing problems facing manufacturers, importers and retailers. On a bright note, looking forward to the Spring season, we anticipate prices to decrease at retail, due to forward looking data on the decline in cotton prices,” said Tananbaum.

The good news is that consumer shopping on Black Friday last week surpassed all records with sales up over 6% (Source MSN.com).

So even if there was a slight increase in production cost (that may not have been passed on to the consumer) the volume should make up for any factoring costs incurred by companies selling invoices.

In the end, consumers were sick and tired of staying on the sidelines (spending wise) and this gave business a good hit at the end of 2011.

Banks are not approving loans like they used to and recurring cash flow challenges for medical supplies companies are not going away.

Medical supplies factoring has been evaluated in the past, but this alternative financing option is becoming a popular and convenient solution to cash flow problems.

Most medical supplies companies do not receive payments for their goods until weeks after they have been delivered. In fact, a common cycle occurs when companies need to order additional products to ship out to their customers before they have been paid by those same customers.

By factoring their receivables,these companies can improve their cash flow tremendously, giving them enough cash to buy new inventory regardless of when their customers pay.

Factoring is Not a Bank Loan

Factoring offers a huge advantage for companies because unlike a bank, the factor’s main concern is the credit rating of the customer who is responsible for paying the invoice. In addition, the only collateral used by the factor is the receivable, whereas a bank would often require personal collateral to secure a loan. Also, many of factoring firms do not require long-term commitment. Therefore, a company can factor its receivables for as long as it likes.

Factoring Promotes Business Growth

Another advantage of factoring is that it alleviates the hassles of the collections process. Once the company sells the receivable, the collection process can be handled by the factor. Medical supplies companies don’t have to worry about making collections calls, following up on skipped invoices or hunting down missing documents. This saves time and money and allows companies to allocate resources to more important day-to-day operations of the business.

Factoring is Easier to Find than a Bank Loan

There are thousands of factoring companies to choose from, so finding a company that will factor medical supplies accounts receivables is easier than ever. For example, type ‘medical supplies factoring’ into a search engine, and a slew of factoring companies will show up in the results. While there are many factoring companies to choose from, they differ on a large scale. Some may serve an array of industries, while other only factor invoices for a specific industry. Some operate nationally, while some focus their attention in one geographic region. Of course, there will also be many different advance rates and factoring fees amongst factoring firms.

With the current economic climate, it’s likely that more medical supplies companies will turn to factoring firms for financing. It allows start-up companies to develop and helps veteran companies continue to thrive.

Philip Cohen is the founder and president of PRN Funding, LLC, which is an extraordinarily focused niche player in the medical supplies factoring 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 supplies companies 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 reprinted with permission by PRN Funding, LLC.

Nearly 50% of Retail Executives say their ability to secure financing has not improved or has worsened in the past year, according to a recent study released by CIT Group and Forbes Insights.

As banks continue to restrict business lending the need for factoring invoices remains strong.

Overall the study shows retailers generally pessimistic about the U.S. economy with 76% expecting the financial crisis to extend into 2012 or beyond.

Here are some additional results from the news wire that may also impact your factoring business.

Press Release: October 19, 2011 08:30 AM Eastern Daylight Time

NEW YORK–(BUSINESS WIRE)–Middle market retail executives are bearish on a short-term U.S. economic recovery, even though many expect their own companies to improve faster than the industry, according to the third annual Retail Finance Outlook study released by CIT Group Inc. (NYSE: CIT) cit.com, a leading provider of financing to small businesses and middle market companies. While a majority of retail executives expect business to improve in the coming months, they remain cautious when it comes to increasing staff levels, building inventory, and assessing the availability of credit—especially for their customers.

These are some of the findings detailed in the research study, “Retail Finance Outlook 2011” (cit.com/retailoutlook2011), which was prepared in association with Forbes Insights. The study gathered the views of more than 100 middle market retail executives to assess their opinions on the U.S. economy and retail financing, as well as their views concerning prospects for their own companies and the retail industry as a whole.

“Retail executives maintain a sense of optimism about their own business growth prospects, even while they continue to sour on the idea of a quick recovery of the U.S. economy,” said Burt Feinberg, Group Head of CIT Commercial & Industrial. “This study highlights some of the key factors affecting the retail sector, including the price-conscious consumer, waning consumer confidence, the increased influence of social media, rising commodity costs, and consumer access to credit.”

Key Findings from the Study:

• NO END IN SIGHT TO FINANCIAL CRISIS: Retail executives remain pessimistic about the U.S. economy, with three-quarters expecting the crisis to extend into 2012 or beyond. A return to growth in the financial markets is also seen as taking some time, as 58% of retail executives don’t see growth resuming until 2013 or later.
• FUTURE SALES GROWTH TO INCREASE: Retail executives remain cautiously optimistic about their outlook for the coming 12 months. Nearly 60% predict sales will either grow (51%) or grow significantly (8%), with just 9% of executives predicting a sales decline in the next 12 months. Compared with the Retail Finance Outlook 2010 study, retailer optimism has been tempered. Last year, 22% of executives foresaw significant growth, and 68% predicted overall expected growth. The number of executives who predicted any decline in sales was just 2% in 2010.
• CAUTIOUS OPTIMISM FOR THE HOLIDAY SEASON: Nearly three-quarters of executives see sales improving slightly (38%) or staying about the same (36%) as last year for the overall season. Sensing that price-conscious consumers will be looking for bargains this year, 37% of executives predict an increase in last-minute shopping, while 38% expect post-Christmas shopping days to be stronger. On a related note, nearly half of executives believe both broad discounting and the price of fuel will be driving factors in consumers’ decision to spend.
• NEW MEDIA MARKETING LEADING GROWTH OPPORTUNITIES: Nearly six in ten executives report their companies are shifting marketing dollars away from old media toward new media, such as social media campaigns. As part of that shift, 68% of respondents report increases in marketing and deals through social media channels, including Facebook and Twitter. In addition, 63% report that their Web sales are growing (28%) or growing faster than other channels (35%).
• SHIFT TO NEW MEDIA WILL CONTINUE: In a sign that this trend will continue, some 58% of retail executives believe they need to improve their new media marketing strategies, while a further 7% characterize their companies as “late starters” in the new media game.
• HEALTH CARE COSTS AND REGULATIONS WIDELY SEEN AS NEGATIVE: More than any other topic presented, health care costs and regulations appear to weigh most heavily on the minds of retail executives. Over the next 12 months, nearly two-thirds of executives believe changes in health care costs and regulations will be negative (38%) or strongly negative (25%) for their businesses. Just 6% of executives view them as positive for their businesses.
• RETAIL FINANCING AVAILABILTY: Nearly half of retail executives say their ability to secure financing has not improved or has worsened in the past year. For the year ahead, half of executives expect the availability of financing to be stable, while 30% expect availability to improve and only 10% expect it to worsen.
• SKEPTICISM AROUND CONSUMER ACCESS TO CREDIT: Retail executives expressed concern about consumers’ ability to finance their own purchases and household costs. When looking ahead to the next 12 months, a third of retailers see consumer access to credit worsening and 22% see it improving, while the remaining 44% expect little change. Interestingly, 22% of executives expect to increase the lines of credit they can extend to consumers in the coming year as well. A smaller percentage (17%) foresees restricting credit to their customers.
• COMMODITY COSTS CAUSING CONCERN: More than half of retail executives see rising energy costs as being negative (47%) or strongly negative (8%) for business in the 12 months ahead. When asked about raw materials costs, 59% of executives said they feel either negative (48%) or strongly negative (11%) about non-energy commodity costs in the coming year.

Source: Press Release and full copy of the Retail Finance Outlook Study are available at: http://www.cit.com/media-room/press-releases/index.htm

When business owners need access to working capital without bank loans they can turn to accounts receivable factoring.

To learn more about the factoring business check out the Small Factor Series by Jeff Callender of Dash Point Financial in the Factoring Investor training center.

Defined as clinical healthcare professionals that assist physicians and nurses, allied health personnel are an important part of the healthcare system. Hospitals, nursing homes and clinics are beginning to feel the stress of the aging Baby Boomer population, as these institutions are seeing the allied workforce retiring in droves at the same time that patient intake is increasing. Given the circumstances, now seems like a perfect opportunity for savvy business owners to develop their staffing agency to meet the new demands.

However, growing a business takes money…

Allied health staffing agencies need cash to cover the costs of advertising, recruiting, and expanding offices. Unfortunately, right now is a bad time for businesses who are seeking ongoing financing because banks have tightened their lending criteria as a result of the national credit crunch. Moreover, the economic decline instigated a jump in small business credit card interest rates in addition to overly-obtrusive credit restrictions on small business owners.

This situation puts allied health staffing business owners in a conundrum. On the one hand, now is a prime opportunity for supplemental staffing agencies to expand, but on the other hand, no one seems to be lending to businesses these days.

Luckily, accounts receivable factoring companies are still lending.

What’s more, factoring firms do not have the same arduous loan criteria as their conventional counterparts. Here are a few ways that allied health staffing factoring differs from traditional bank loans:

Quick Funding Application Process

Factors generally do not require a history of profitability, personal financial statements, business plans or personal guarantees. Because there are fewer documents needed, allied health staffing companies can receive their first funding within 3-5 days of returning factoring documentation.

No Long-Term Obligation

Many factoring firms will not require business owners to sign a long-term contract. In addition, once the staffing agency has been approved, it can stop or start factoring at any time.

Access to Unlimited Capital

With bank financing, once a company hits the credit limit, it cannot borrow more cash. Invoice factoring is the only source of business financing that grows with the company’s sales. As sales increase, more money becomes immediately available to the agency owner.

No Liability on the Company’s Balance Sheet

Because factoring is not a small business loan, there is no debt, and there are no monthly payments to ‘muddy up’ the company balance sheet.

Allied Health Staffing Industry Expertise

Banks work with all kinds of companies, so they might not be familiar with the intricacies of the industry. There are factoring companies out there who understand the ins and outs of the allied health staffing industry, so business owners won’t have to worry about teaching a factor about their business model.

The allied health workforce will continue to play an integral role in the healthcare system as the demand for their services continues to rise. This need presents a great opportunity that allied health staffing agencies can use to their advantage.

In order for these staffing agencies to acquire new customers, they will need to hire additional employees and possibly expand their infrastructure. Unfortunately, these staffing agencies also need to accomplish this growth during a time when it has become increasingly more difficult to obtain traditional financing. Fortunately, those allied health staffing agencies can use factoring as a flexible financing solution to the cash flow problems that can arise during periods of growth.

Philip Cohen is the founder and president of PRN Funding, LLC, which is an extraordinarily focused niche player in allied health staffing invoice funding. Through a process known as factoring, PRN Funding provides allied health staffing business owners with the financial resources needed to grow and effectively compete in the industry. With no minimums or fixed terms, PRN Funding provides staffing companies with flexible and immediate access to capital. 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 reprinted with permission by PRN Funding, LLC.

Oftentimes, factoring prospects annualize the percentage charged by factors, extrapolating three percent per month to an interest rate of 36 percent per year. In the world of healthcare staffing financing, this scenario is like comparing apples to oranges.

When comparing a bank loan with invoice factoring, it’s important to keep a few things in mind:

• A factor does not loan money like a bank does. Rather, a healthcare staffing accounts receivable factor purchases invoices at a discounted rate. Factoring is a form of short-term funding, so a discount rate should not be converted to an interest rate. For example, some firms offer a two percent discount (2% for net 10) for quick payment. In a year, there are roughly 36 10-day periods. Using the annualized percentage parallel, that comes out to 72% “interest.” Are these companies really paying 72% for quick payment? No, and healthcare staffing factoring companies don’t earn 36% interest either.

• Moreover, a factor is continuously advancing and collecting funds, compared to a bank that provides the money only one time, the day that the loan is received. An accounts receivable factor has the ability to grow as its clients grow. Once a company uses the funds from a bank loan or exceeds its credit limit, there’s little room for it to grow.

• Banks approve business loans or lines of credit based on a company’s historical operating and financial performance, a factor’s main criteria is the creditworthiness of a prospect’s customers. Banks tend to shy away from business owners who are just starting up, going through seasonal growth, have bad personal credit or have too much concentration of their sales with one or two customers. Many factors are able to look past the above criteria because their decisions are based off of a prospect’s customers’ ability to pay. So it’s very possible for a business that has creditworthy customers to work with a healthcare staffing factoring company even though they have been previously turned down for a traditional bank loan.

• The loan process with a bank is time-consuming and cumbersome, and it could take weeks or even months to receive the loan proceeds. Whereas a factoring firm’s application and approval process can take less than a week, and factors have an ongoing ability to approve additional lines of credit quickly.

• Oftentimes, a bank loan requires collateral in addition to a company’s accounts receivable. The only collateral that a factor requires is the company’s accounts receivable. A bank will most likely require business owners to personally guarantee the loan as well, and factoring companies won’t always require a personal guarantee to advance money.

• Taking out a business loan creates debt on a company’s balance sheet, and credit ratings go down because of loan limitations. On the other hand, healthcare staffing funding through a factor increases credit ratings by creating better cash flow and helping the company pay their bills promptly.

• Whereas banks only loan money, there are a multitude of services that factoring companies provide their clients in addition to ongoing funding. Some of these supplementary services include: posting payments, dispersing reports, handling collections and reviewing credit for their customers’ clients.

When looking at the big picture, entrepreneurs have to weigh the costs of factoring against not having immediate cash. More often than not, the decision comes down to either selling the accounts receivable or putting up with crippling cash flow problems and missed sales opportunities.

Philip Cohen is the founder and president of PRN Funding, LLC, which is an extraordinarily focused niche player in the healthcare staffing funding marketplace. 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 staffing 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 reprinted with permission by PRN Funding, LLC.