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

Join us Monday, March 1st at 9pm EST to discover how to profit with alternative financing.

Nearly 80% of North American companies report that the economy has had a direct negative effect on their business with a majority citing lack of funding, tightening cash flow and a slowdown in customer payments.

The Alternative Business Finance Industry is bursting wide open with opportunity and experiencing unprecedented growth in assisting small to medium sized business with their cash flow endeavors.

Yet an astounding numbers of companies are not aware of this $136 billion dollar industry and the cash flow instruments available to them when the Bank says “No”.

The credit crisis and economic meltdown has also created an opportunity for business professionals and individuals seeking a career change to earn substantial “residual” income in brokering, buying and selling invoices.

Plan to attend the complimentary webinar titled “The Alternative Finance Industry Exposed” hosted by The Business Accelerator Inc. and Millennium Funding. You will learn how to Capitalize Your Business, Your Potential and Your Future.

This all new webinar is scheduled Tuesday, March 23rd – Two Times to Choose From!

2 p.m. – https://www2.gotomeeting.com/register/502269690

9 p.m. – https://www2.gotomeeting.com/register/539521594

]]> http://factoringinvestor.com/experts/new-factoring-webinar-the-alternative-finance-industry-exposed/feed/ 1 http://factoringinvestor.com/nuts-and-bolts/why-use-spot-factoring/ http://factoringinvestor.com/nuts-and-bolts/why-use-spot-factoring/#comments Fri, 19 Feb 2010 22:03:48 +0000 Steve Ontiveros http://factoringinvestor.com/?p=1503 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.

Here’s why we do spot factoring:

1. Control: We prefer to give our clients the control over their own AR. They know week by week what their working capital needs are better than we ever will. If they have a 100K invoice, but only need 20K this week – then we’ll do that for them. Why pay the spot factor rate on money you don’t need? That needlessly ties my clients hands behind their backs.

2. Soft Sell: It’s easier to tell a prospect (particularly after they look at spot factoring rates) that they can factor as much or as little as they like. Hire us and fire us in the same day if you feel like it.

3. Higher than Average Referral Rates: For those spot deals we organize, we have seen over the years that our clients are happier in those situations compared to non-spot deals. Happier clients = more referrals = more business for us.

Steve Ontiveros of Resource Business Partners can be found online at www.wefactor.com.

Looking for more information on spot factoring?  See the FactoringInvestor.com article entitled “What is Spot Factoring?”

Unfortunately for consumers, that creativity often translates into price hikes, additional fees, reduced services or cut backs on productivity. But does it have to be that way?

Take a look at the airline industry. When fuel prices soared last summer, airline giants started charging extra for what were once common courtesy services in addition to the original ticket price. They started with charging for snacks and drinks and then quickly moved onto charging checked bag fees, assigned seat fees, fuel surcharges, curbside check-in fees, etc.

Once the industry giants established that this additional fee policy was going to be part of the standard flight-booking procedures, it didn’t take long for all of the airlines to jump on the “Hidden Fee Bandwagon.” From a customer’s perspective, it seemed as though the airline industry as a whole started seeing dollar signs instead of thinking about its customers needs. Then along came Southwest Airlines with its clear thinking and its “No Fee Policy.”

In some ways, the accounts receivable factoring industry can appear to be a lot like the airlines industry. Both operate world-wide, both industries should be service-oriented, and both industries are notorious for tacking on extra fees in addition to the basic fee. Much like Southwest Airlines, the factoring industry has a handful of healthcare factoring companies who do not charge extra fees in addition to the base fee. This article will discuss three areas where factoring firms might insert hidden fees.

First and foremost, a business owner needs to understand the basics of how a factor charges for its factoring services. It’s important to note that healthcare factoring firms do not loan money; rather, they purchase a company’s invoices at a discounted rate. This discount rate can be a one-time flat fee, or it can vary depending on how long the factor owns the invoice.

In general, discount rates can be affected by a number of things, including the contractual commitment, the average monthly purchase volumes, the average size of the invoices sold, the number of account debtors (customers) that will be factored and the credit quality of those debtors. Variations in each of these will lead to potentially substantial changes in the fee structure. In many cases, factoring firms will have extra fees in addition to their factoring discount fee. More often than not, these “hidden fees” are disguised as set-up fees, administrative fees and penalty fees.

Set-up Fees
There are some factoring companies that start charging fees as soon as a potential client applies for  healthcare factoring services. Set-up fees range from a minimal application fee of $25 to a hefty origination fee of $500. In some cases, factors will add in individual fees for due diligence procedures (i.e. running credit and background checks) and legal documentation fees (i.e. assembling legal documents and filing liens). When all is said and done, a new factoring prospect could be $1,000 out of pocket before knowing if he/she has been approved for funding.

When business owners are comparing and contrasting factoring companies, it’s important to inquire whether the factor charges specific set-up fees. Sometimes, the factor will say yes, and sometimes it will say no. It’s up to the business owner to decide whether or not the factoring services outweigh the start-up costs before moving forward.

Administrative Fees
In addition to application, origination and due diligence fees, some factoring firms charge their clients for the time it takes to compile and ship legal documents, billing for postage, long-distance phone calls, photocopying documents and/or time spent on the computer while assisting their clients. There are also fees associated with funding procedures. Most factors will institute set prices for a same-day wire or an overnight transfer of funds.

When a business owner is contemplating the notion of factoring his/her receivables, it’s important to factor any administrative costs into the equation. Without doing so, a business owner could wind up paying a lot more than he/she had initially anticipated.

Penalty Fees
The last way a factoring firm could potentially squeeze in some additional “hidden fees” is when it assigns fees for various “penalties.” Under this umbrella of penalty fees, a factoring firm could designate fees for misdirected payments, early termination of a contract, aged invoices, expedited funding (within 24 hours or less), not hitting a monthly minimum factoring requirement or going over the maximum allowable factoring amount. In addition, a healthcare factoring firm could also penalize its client by holding onto the funds within the reserve account (cash that is owed back to the client once payments have been received).

When choosing an accounts receivable factoring company, business owners should take the time to read all of the terms and conditions before signing on the dotted line. Entrepreneurs should not be afraid to dig deep into the factoring contract and ask a question when something is unclear. Otherwise, those hidden fees hidden fees will reveal themselves at a point where it’s too late to re-negotiate the terms.

So in conclusion, it does appear that the factoring industry is similar to the airlines industry in that players in both are notorious for charging “extra fees.” The plus side to this realization, however, is that both industries also have some players who stand firm in their “No Extra Fee Policy.” The bottom line-much like when shopping for the best airline deal, it’s extremely important to look at the all-inclusive price, including possibly extra fees, before agreeing to do business with an accounts receivable factoring company.

About the Author: Philip Cohen is the founder and president of PRN Funding, LLC, which is an extraordinarily focused niche player in the healthcare staffing 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 medical 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 Source: EzineArticles Freedom From Factoring Fees

Of course these stats are no surprise to business owners.  Rebuffed by banks, they increasingly turn to factoring and purchase order financing for cash flow needs. The New York Times recently ran an article on the shift, highlighting individual companies that used purchase order funding last year when long-time bank loans had left them standing solo at the financing alter.

This alternative business financing market increased an astounding 80% in 2009 for one of the purchase order funding companies interviewed.

The article, entitled The Places They Go When Banks Say No, (by Andrew Martin, January 30, 2010) can be read at NYT online.

Purchase order (PO) funding provides a cash advance so the business can pay the source company manufacturing the goods.  This allows the business to obtain the product, or materials needed to create the product, that will ultimately be delivered to the customer.

On the other hand, factoring provides cash through the purchase of invoices or accounts receivable at a discount for services rendered or products already delivered. Factoring involves funding after performance while purchase order financing requires funding prior to performance.

Both factoring and purchase order funding are in demand during the credit crunch providing opportunity for cash flow brokers and investors.  To learn more be sure to read How I run My One Person Factoring Business, by Jeff Callender.

Make sure to review these timely topics as you make plans for your accounts receivable financing business in 2010.

#5  – 10 Benefits to Factoring Invoices and Accounts Receivable

Every business has cash flow needs but options are dwindling in the face of a recession. Fortunately savvy business owners know they can still raise cash when banks say no to business financing. Read More…

#4 – Earn Consultant Fees Factoring Invoices with Millennium Funding!

Factoring account receivables is helping businesses through these tough economic times opening the door to earning opportunities for cash flow consultants. Find out how factoring brokers can earn fees by helping businesses sell invoices. Read More…

#3 – How to Obtain and Factor Government Contracts to Cash in on the $787 Billion Recovery Package!

The American Recovery and Reinvestment Act was signed into law promising to spend another $787 billion to stimulate the economy. While families and businesses have a death grip on their money, the federal and local governments are spending freely.

For better or worse, these billions will be spent so how can we cash in on our piece of the recovery? One way is to obtain or factor government contracts! Read More…

#2 – How I Run My One Person Factoring Business

Have you wondered what it takes to run a small factoring operation by yourself or with just a family member?

What do you need for day-to-day operations in terms of equipment, technology, documentation, and know-how? Read More…

#1 – Free Webinar for Business Owners and Factoring Brokers – Discover Why Yahoo Hot Jobs Names Factoring Broker as a Top 10 Profession for 2009!

When Yahoo included Factoring Brokers on their list of 2009 Hot Jobs it created a stir of activity.  Read More…

Business owners and cash flow brokers were eager to take part in this lucrative $127.6 Billion Dollar Industry. This led to a popular series of Free Webinars on How to Broker, Buy, or Sell Invoices for Cash! Read More…

Thanks to all of our faithful readers for making 2009 a great year at FactoringInvestor.com. We wish everyone a successful and prosperous 2010!

All Done!

In a few short minutes you will be receiving (via email) your very own copy of The Factoring Hot List.

You are also part of the Factoring Investor “inner circle.”  This entitles you to receive free weekly updates on what is going on in the factoring industry including special funder interviews and real world strategies to help you excel in the cash flow business.

Until then, check out the FactoringInvestor.com site and be sure to visit a few of our sponsors that make this possible.

If you have any questions, or would like to know more about a particular topic, don’t hesitate to contact us.

We look forward to working with you!

All the best,

Fred and Tracy Rewey, FactoringInvestor.com

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:

2010 IFA Factoring Conference

April 14 – 17 – Fairmont Scottsdale – Scottsdale, AZ

Bankruptcy & DIP Financing

January 13 – Intercontinental Miami – Miami, FL

Presidents & Senior Executives Meeting (Sold Out)

January 14 – 15 – Intercontinental Miami – Miami, FL

Luncheon Meeting in Conjunction with New York Institute of Credit

March 2 – Arno Ristorante – New York, NY

Account Executive / Loan Officer Training Course

June 3 – 4 – Treasure Island – Las Vegas, NV

The Law and Business of Factoring

June 7 – 8 – Treasure Island – Las Vegas, NV

How To Offer PO, LC’s and Inventory Finance

July 15 – 16 – Treasure Island – Las Vegas, NV

Transportation Factoring Meeting

August 26 – 27 – Intercontinental Kansas City at the Plaza – Kansas City, MO

Small Factors Workshop

October 14 – 15 – Rio All Suites Hotel – Las Vegas, NV

Factoring Sales & Marketing

November 4 – 5 – Rio All Suites Hotel – Las Vegas, NV

For more information or to sign up for any of these factoring events, please visit IFA online or call 1-800-563-1895.

While this career is fairly foreign to most folks, it is quickly becoming a very “Hot” opportunity, since bank loans are hard to come by.

By definition, Factoring allows small business to get funding based on their current accounts receivable. “It’s a huge business and, at a time when people can’t get other types of lending, factors are skilled experts at lending against accounts receivables” (says Joy Victory at Payscale.com). There has never been a better time than now to create another income stream by becoming a factoring broker.

If you are looking to supplement your income to meet household monthly expenses, mortgage payments, make greater contributions to your 401K, other retirement plans or seeking a career change, then this may be a perfect opportunity for you.

The great thing about brokering (finding companies in need of cash) for the Factor is you create residual income. This means you will be paid a commission on a monthly basis as a percentage of the fees collected by the Factor.

With the proper knowledge, training and support and with little or no experience in this industry one can learn in little than 24 hours how to implement and execute “The 3 Step Brokering Process”.

This simple process includes:

Step 1 – Finding the Prospect

Step 2 – Gathering 3 Items of Information for the Factor

Step 3 – Submitting the Information to the Factor

Once the process has been completed the Factor will then take over and conduct the necessary due diligence, communicate with the client and close the transaction. As a Factoring broker you can participate in as little or as much as you wish in the transaction. Most Factors are willing to pay full residual commissions to a broker who simply finds a qualified prospect and introduces that prospect to the Factor.

Want to learn more about how you can participate in this explosive opportunity?

We invite you to do a little scratching beneath the surface and join us for a 45 minute Complimentary Webinar hosted by The Finance Institute – sponsored by Millennium Funding and Business Accelerator Inc. It doesn’t hurt to educate yourself… nor does it hurt to talk with Industry Practitioners to get all the facts. You may really like what you see, and it may open new paths in your mind to a new way of business.

This webinar will take place on Monday, March 1st at 9:00 p.m. (EST) – Click the banner below to register.

How will they be treated? What if they pay me directly? What do I tell them? Here are some common questions and helpful answers.

I don’t want to sell all my invoices. Is that possible?

Yes. Most factoring companies will allow you to pick and choose which invoices to factor. Of course they must be “credit worthy” but the factor will help you decide which ones are in your best interest to sell.

Where do the payments get sent?

Your customers will mail payments directly to the factoring company. Any “reserve” will then be forwarded on to you.

What if the customer mails me the money?

This is common, especially on the first payment. Factoring companies will require you to forward them the check. In other words, you are not to cash it and write another check to the funder. This helps the factor keep track of each customer’s credit worthiness (as well as avoid fraud). Your clients will then be notified that they need to mail payments directly to the factor.

How do I know the factor will treat my clients well?

The factor is in business with you. They want you to succeed and continue to grow. They are not a collection company. They want to maintain your customer satisfaction just as you would.

What should I tell my customer? Will it look bad if I am factoring?

Odds are your client may already be familiar with the process and not really think anything of it. If for some reason they are not, you simply need to tell them that you have chosen to use an outside company to manage your account receivables.

Still looking for more information? Check out 5 Things to Know Before Applying for Factoring.