Tweet

Busting Healthcare Staffing Factoring Myths

Guest post by: Phillip Cohen

Article Overview: PRN Funding delves into myths surrounding the healthcare staffing factoring industry. Learn more about the healthcare staffing funding services we have available.

Busting Healthcare Staffing Factoring Myths

There are a lot of rumors that factoring is not an ideal payroll funding solution for healthcare staffing business owners and entrepreneurs. However, many of those rumors are a result of misinformation and poor healthcare staffing factoring research methods. This article will help debunk some of the more common factoring myths so that healthcare staffing business owners can make an educated decision when it comes time to finding the appropriate funding solution for their cash flow problems. Healthcare Staffing Factoring Myth #1: I'm nervous to factor my healthcare staffing invoices because my customers are not familiar with it.

Reality: Factoring has been around for over 4,000 years. In fact, many big name companies have benefited from it, including: 3M Corporation, Best Buy, American Express Company, Motorola Inc., CVS Corporation, and Foot Locker. In addition, factoring is very prominent in the world of healthcare staffing because medical facilities routinely take weeks or months to pay their healthcare staffing vendors. In most cases, in order for a healthcare staffing business owner to utilize a factoring firm, the accounts payable clerk who handles the payables just needs to change the remittance address.

Healthcare Staffing Factoring Myth #2: Healthcare Staffing Invoice Funding is an expensive financing option.

Reality: It's important to consider the fact that a factoring fee is not the same thing as an annualized interest rate. For example, if a factoring firm charges a healthcare staffing agency owner 3% per month, it cannot simply be translated into 36% APR. Rather, a factoring firm's fees stop the day an invoice is paid. Healthcare staffing firms do not typically wait 12 months to receive payment on an invoice, so the fee is not nearly as large as one would perceive it to be.

Healthcare Staffing Factoring Myth #3: Healthcare Staffing Factoring requires a long-term commitment.

Reality: Unlike a bank loan, most factoring companies who work with healthcare staffing agencies do not require a fixed-term financing commitment. You choose when, who, how much and how long to factor your invoices.

Healthcare Staffing Factoring Myth #4: With factoring, I will lose control over my accounts.

Reality: Selling healthcare staffing invoices makes it easy for business owners to manage their invoices. Most factoring firms offer their clients access to financial reports weekly or daily. In fact, there are many factors who grant access to a secure online reporting system where healthcare staffing entrepreneurs can review purchased accounts and collections in real time via a secure Internet connection.

Healthcare Staffing Factoring Myth #5: The hospitals and nursing homes will think my agency has cash flow problems.

Reality: There are many businesses who use factoring and many medical facilities are already familiar with healthcare staffing factoring. Once alerted of the change in remittance address, healthcare facilities simply view the factor as the agency's new accounts receivable department.

Healthcare Staffing Factoring Myth #6: The hospitals and nursing homes where I staff will be bothered by frequent collection calls.

Reality: A factoring firm will initially contact an agency's customer to verify that the invoices are valid. If there is a problem and the healthcare staffing factor cannot successfully collect on the invoices, the factor will contact the agency owner to discuss the issue.

Healthcare Staffing Factoring Myth #7: The healthcare staffing business model is too complicated for a factoring firm to understand.

Reality: There are many accounts receivable factoring firms that are familiar with this intricacies involved with the healthcare staffing industry. As a result of their industry expertise, these factoring firms have specialized funding programs specifically geared towards healthcare staffing agencies.

Certainly, reviewing these seven common myths will help healthcare staffing agency owners who are trying to piece together the facts about invoice factoring. Hopefully, this article has proven that there are two-sides to every story. You can learn more about managing factoring fears, all it takes is a little research to get started!

Related Articles
  What NOT to Do When Picking a Healthcare Staffing Payroll Factor
  What is Healthcare Staffing Payroll Factoring?
  Healthcare Staffing Factoring Works For Agency Owners
  Recourse and Non-Recourse Nurse Staffing Accounts Receivable Factoring: What’s the Difference?
  How Can Medical Staffing Payroll Factoring Help My Agency?
  A How To Guide: Allied Health Staffing Factoring
  PRN Funding Introduces Real-Time Web Communication
  Top Five Reasons to Use Nurse Staffing Account Receivables Factoring
  What to Tell Your Customers about Nurse Staffing Account Receivables Factoring
  Allied Health Staffing Factoring – A Financing Solution for Expanding Companies
  The Truth about Allied Health Staffing Invoice Funding
  Top Three Common Mistakes to Avoid when Choosing a Nurse Staffing Payroll Factoring Company
  Medical Staffing Invoice Funding: Tips for Managing Customer Fears
  Home Healthcare Factoring: The Right Funding Solution for Your Home Healthcare Agency
  What is Needed to Complete an Initial Nurse Staffing Account Receivable Factoring Transaction?
  How Will My Customers View Temporary Nurse Staffing Account Receivable Financing?
  The Ongoing Nurse Staffing Payroll Funding Process
  Selling Medical Staffing in a Non-Buying World
  Three Reasons Why Allied Health Staffing Agencies Should Factor Their Invoices
  Myth Buster: Factoring Is Too Expensive?

Article Tags: healthcare staffing factoring, healthcare staffing financing, healthcare staffing funding, prn funding



Related Forum Posts
Hi! - Hi everyone! I'm Laura from Platinum Staffing Solutions. Like the saying goes, "when the student is ready, the teacher will appear", I guess I'm ready! I'm looking forward to reading and posting/ meeting like minded entrepreneurs, this a first for me. I'm usually reading, studying or attending workshops locally, it's time to step up the game. I own PlatinumStaffingSolutions.ca, as I've mentioned, I started my own company over two years ago to be able to do what I know how to do with the integrity that lacked where I was previously working. It's a *people* centered agency that keeps the best interests of both the professional and the hiring company in mind. It's a tough industry, especially right now, any leads or referrals would be appreciated. Business-wise I'm very big into Napoleon Hill, Wallace Wattles, W. Clement Stone, Genevieve Berhendt, Florence Shinn - all of the late/greats; I'm wary of the modern writers but still like to read what applies to keep learning or see different perspectives; no one theory of success applies to every business out there. Hopefully you'll drop me a line and see ya' on the boards!
Seek Venture Capital & Funding - Hello, Greetings from India. I am Seeking Venture Capital for Offshore Software Company Start-up. Need advise along with Business Model Sample. I have a basic outline for an offshore company. 1. Technology - like Microsoft Dot Net, Java, LAMP 2. Talent Team - Found Good Technology Developers. 3. Where I can get the leads/potential customers - Leads have been identified who are willing to move forward offshore projects. 4. I do not have resources like funding. It is a very critical factor to me Industries: Manufacturing, Real Estate, Retail, Insurance, Distribution & Logistics, Healthcare, Industry Associations and Software Product Development, Agricultural Industries and Etc. Services: Offshore Software Development Company. Offices to be located: Hyderabad, Andhra Pradesh, India and USA. Products/Services/Applications in areas like POS & Billing, Sales & Distribution, Production Planning, Material Management, Inventory Control, Plant Maintenance, Purchasing, Accounting and Logistics. Dynamic Web Programming with Database Driven Content Management Systems, Online Stores for E-Commerce, B2B Solutions, Community Portals, Website Redesign and Development, Custom ERP with Enterprise Wide Functional Modules such as Marketing, CRM, Accounting, Inventory Control, Sales & Distribution, Production Planning, Purchase & Stores, Logistics and Supply Chain. Seek your further questions and help. Thank you, Best Regards, Jayapratap.
Different Types of Funding - Finance for business can be obtained through a number of different sources. Let's review some of those channels to help you decide what's right for your business needs: Grants There are over 930 different EU and UK grants and loans available from over 100 issuing bodies. This is the cheapest form of finance and an important part of the funding package that companies and individuals need. We can help you find your way through this maze. Technology Micro Projects: 50% of eligible costs up to £20,000 Research project: For a technical and feasibility study of an innovative idea for new technology 60% of costs up to a grant of £75,000. Development project: For development up to pre production 35% of costs up to a grant of £200,000 Developing an innovative idea: valuable for small companies and individuals at the start of a technical project: 75% of costs of hiring a mentor and consultants. Export To start exporting or moving into new markets grants of 50% of costs up to £20,000 each. Training and Education Knowledge Transfer Partnerships, Achieving Best Practice in Your Business, Investors in People Modern Apprenticeships New Deal for various grants. Environment BOC Foundation for the Environment: 25% to 50% of Project cost, typically £20,000 to £100,000 Clean up Fund: Emission reducing equipment up to 75% of cost Community Chest Fund: Up to £25,000 for projects near active SITA sites High Impact Fund: £150,000+ for larger projects near SITA sites Assisted Areas Regional assistance grants of between 10 and 35% for capital expenditure in less favoured areas of the UK. Loans Loans are an excellent source of finance if you have suitable security to borrow against or a reliable earnings stream. This needs to be planned and presented well to obtain funds. Credit cards Provides up to 56 days free credit if you play the game! Overdraft Banks are surprisingly supportive when presented with a well thought through plan and competent management. Bank Loans Lenders tend to look for a good business plan and security. Typically the loan is approved by a centralised back office function rather than the person you meet. Terms and rates depend upon the risk. Repayments can be very flexible to meet your specific needs. Mortgages These can include flexible repayment terms to meet your business needs. This can even be incorporated into your overdraft finance so that you have one flexible account for both personal/ business mortgages and overdraft Small Firms Loan Guarantee Scheme Up to two years trading: Up to £100,000 Over two years trading: Up to £250,000 However these are difficult to obtain and are a loan of last resort. Export Guarantee Scheme This is government backed insurance against appropriate export documentation. Mezzanine This is a halfway house between loan and equity. It can be an innovative way of raising funds for the more established business. Mostly for expansion capital. Equity This is not as easy as the papers would have you know. Only 1% of business plans received by Venture Capital Funds are successful. However, a good business proposition consisting of a strong demand for the product or service, management track record and a sound financial plan will enhance the chance of success. Business Angels These are high net worth individuals who are successful businessmen looking for investment opportunities. They can provide both time expertise and money. Typical investment size is £25,000 to £250,000 but can go as high as £2m for the right opportunity. Exit within 3-5 years. Venture Capital These are investment funds seeking high rates of return. However typically investments are over a million pounds. Some funds are targeted at lower amounts depending upon the sector and region. These funds are looking for exponential capital growth over 3-5 years. Asset backed finance This can cover machinery, sales invoices even sales orders. It can be a very flexible source of finance to the growing business Leasing This will cover your capital expenditure and spread the cost over a three to five year period. It is particularly useful if you do not have taxable profits to maximise your capital allowances. Sale and leaseback of a property you own is another good source of funds. Factoring Factoring offers a sales ledger administration and debt collection service. Up to 95% of an approved sales invoice is paid within 48 hours, quicker if required. Credit protection is also available to protect against a bad debt. The Factor will own and place a first charge over the book debts and they might also take other charges, depending upon the strength of the financial information. Invoice discounting Invoice Discounting can be Confidential or Disclosed; it depends upon the strength of the financial information. The service is the same as Factoring, except that the sales ledger administration and the debt collection is the responsibility of the client and not the Factor. Pre payment of the approved sales invoice is still up to 95% and the factor will still have a first charge on the book debt and therefore own the debt. This service can also have credit protection cover. All sales invoices need to be for a business to business debt, and some proof of delivery is generally required. Trade Finance This is funding provided against stock purchases, signed contracts and orders whereby the funder will prepay a certain percentage of the value Pension fund It may be possible to use your pension funds for a loan back to the business What do u think about it?
Re: Using factoring companies - [quote="BigJim22":3e4n6n63]I haven't used it myself but can see how it would be valuable for some entrepreneurs. It's hard when you get an order but don't get paid until 30, 60, or 90 days later. But it's also hard to give up $ to the factoring companies![/quote:3e4n6n63] ..."But it's also hard to give up $ to the factoring companies!" Great comment, Jim! However, it's not as hard as it may appear from the outside. Unfortunately, there is no free meal ticket with any financing option (other than gov. grants). The real question regarding the financial viability of factoring is this: I have 2 checks for you; one is for $100 and you can have that one in a month; the other one pays you $80 now plus another $15 in a month. Yes, you net 5 cents less on the dollar with option 2, but if you can take the first $80 now and turn them into $90 or $100 (e.g. more sales!) in a month, then you've not only off-set the loss but actually grown your top and bottom line. Factoring is really much more like running a price promotion. Just look at all the sales events that are happening daily. Companies discount their goods by 10% - 75% only to sell more volume. What are the costs of these programs? Another good example are credit cards! If you as a merchant accept credit card payments from your customer, you're already paying 2% - 5% of each sale to the credit card company. That's the same principle as factoring! Or how many businesses offer a 2% net 10 days discount to their customers, only for them to pay within 10 days? By the way, I can beat those 2% net 10 hands down with our factoring rate! And then there are traditional loans.... you always have to pay back the principal AND interest periodically, no mattter how the business is doing. With our factoring programs there is no principal or interest to be paid back, and the "cost of factoring" is tied to sales and cash flow (i.e., when an invoice actually gets paid and after you have already received the money). The objective truth is that factoring is not the right solution for everybody. Used wrongly or irresponsibly, it can do a lot of damage to a company. But used for the right reason and under the right circumstances, a good factor and factoring program will do miracles for a company's growth (or survival). And in these situations, the $ that go to the factoring company become totally moot. It will truly be the famous win-win. Best, Ralf
Why a project fails? - The top 10 factors that have driven failed projects are: 1. Project sponsors are often not committed to the objective. They have a lack of understanding of the project and are not actively involved in the project strategy and direction. 2. Some projects do not meet the strategic vision of the company. If business needs are not clearly defined, it will result in a project that does not add value to the bottom line or enhance business processes. 3. Projects are started for the wrong reasons. Some are initiated purely to implement new technology without regard for whether the technology is supportive of the business needs. The converse of this is a project that does not support existing technology, resulting in major scope creep and resultant expenditure. 4. Staffing is a reason for failure, eg not enough dedicated staff (project managers and project team members) allocated to projects. Project team members lack experience and do not have the required qualifications. Line-staff believe that they will be able to manage projects but are only 40% available to do so. Focus in this regard is not on the delivery of the project, but on the comfort zone of the project manager and his own time management. 5. Incomplete project scope. No clear definition of the project's benefits and the deliverables that will produce them. 6. A project plan that is non-existent, out of date, incomplete or poorly constructed and just not enough time and effort spent on project planning. 7. Project value management is not put into practice to evaluate baseline cost agreed during baseline transfer against actual costs spent at any given time. Project costs and financial do not form an integral part the project during execution. 8. Insufficient funding, and incorrect budgeting is still a major reason for projects not delivering their goals and objectives within the quality framework that was required, because projects always need to deliver yesterday within X budget. 9. No formal project management methodologies and best practices aligned to the company's specific needs are used to assist project performance. Companies do not want to invest in best of breed methodologies that will benefit the bottom line over a period, with projects delivered within budget. Companies do not recognise the value of using a methodology to support and enable them to record their own best practice project results for future reference, and to build a knowledge base within the company. 10. Not all project are going through a formal signed off process using a proper post mortem process to determine lessons learned and to build their own reference model for future use. A certificate signed off between sponsors and other third-parties will demonstrate project success but even that is quite seldom.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

10 Steps to Excelling at Franchise Sales

How do you keep it together on a daily basis?

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.