FACTORING QUESTIONS AND ANSWERS
Funding Source Answers to Q: Is Accounts Receivable funding a new financial option? A: Not at all. Accounts receivable funding is one of the world's oldest forms of financing. It has been in use for over 4000 years in a variety of forms. In the U.S., at least until the mid-1980's, many people thought that this form of financing was exclusive to the textile and garment industries. Q: Is Accounts Receivable Funding different from similar financing from a bank? A: Factoring focuses on the credit worthiness of your customers when making funding decisions. Banks will focus on your company's financial history and cash flow. Additionally, since accounts receivable funding is not a loan; there is less debt on your company's balance sheet. Factors are able to make quick funding decisions, banks may take weeks or months to approve a loan.
A: If a bank has a lien on your company's accounts receivables, you should let us know at once. We will ask the bank to subordinate that lien in favor of the factor. Whether this is possible depends on the policy of the individual bank in question. Alternately, we may be able to arrange to pay down or pay out the loan from your funding. It is very important that we have this information in advance. Q: My company has an outstanding tax bill. Can I still apply for Accounts Receivable Funding? A: Tax problems vary in complexity and are handled on a case-by-case basis. It is urgent that we know of any tax issues immediately so that we can discuss lien subordination with the IRS.
Accounts Receivable Funding still an option? A: Please note that Chapter 11 is the only form of bankruptcy that we consider and it is on a case-by-case basis. Q: What information will you need from my company to begin the Accounts Receivable Funding process? A: Along with a fully completed application, be sure to include your company's most recent accounts receivable and accounts payable aging reports if available, a master customer list that includes the customers name, address and telephone number and a copy of your articles of incorporation or d/b/a filing.
A: Ideally, we would like to credit approve all of your customers. Once we have your master customer list we will begin the approval process. This will save you time when you begin submitting invoices to us. Any time you have a new prospect or new customer, we will check them out for you.
A: No, but remember that higher numbers of receivables purchased on a regular basis can result in more competitive rates and advances. Additionally, the average cost of financing will likely be lower when there are larger numbers of invoices issues to a larger rather than smaller pool of your customers. Q: How much of my company's accounts can be funded? A: We can purchase up to 100% of your company's creditworthy account receivables.
A: Initial funding takes from 5-10 business days after we receive your signed contract. Naturally, the time frame is dictated by how fast you supply us with the information necessary for us to proceed. After the initial funding your company will receive funding within 24 hours of our receiving your submitted invoices. Same day funding is available to you.
A: We will fund your existing creditworthy outstanding A/R of up to 60 days immediately upon completion of the contract process. Q: Are Accounts Receivable Funding fees tax deductible? A: Most accountants agree that these fees are financing expenses and should be treated as such.
A: The invoice verification process is an essential and accepted part of the factoring process. Because factors verify invoices with customers, they can tell clients if there is a customer service problem in a timely manner. A non-factoring client may not notice such problems until the invoice becomes past due. By that time, it may be too late to save the account. So that the process will run smoothly, we will send a customer notification letter, on your letterhead, as well as contacting your customers by telephone. Q: What should I do if a customer mistakenly sends the payment to my company? A: This might happen, particularly during the initial funding process. If this should occur, the check must be forwarded to the factor at once. Your company must never deposit invoice checks that were already purchased by the factor. We ask that you notify any customer that may pay you directly, to pay the factor in the future. Q: What happens if my customer doesn't pay the invoice? A: If this should occur, your company would have to reimburse the factor, normally by having it deducted from the next advance. When that invoice is paid the funds are rebated to you. Q: How can I be sure that you will treat my customers well? A: The last thing we want is for you to lose a customer. Maintaining customer good will and confidence is as important to us as it is to you. If an invoice is seriously delinquent and you choose to pursuer payment, we can provide a collection service as needed. Funding Source Answers to
Medical Receivables FAQ'S: A: We provide capital to healthcare providers nationwide including doctors, medical practices, nursing homes, hospitals, home healthcare companies, rehab clinics, durable medical equipment providers, MRI and radiology centers, Anesthesiologists, Dialysis centers, laboratories and others with receivables payable by Medicare, Medicaid, HMO's, and private insurance. Q: Do you fund chiropractor clinics? A: No, do not fund certain types of longer turning worker's compensation, personal injury, or no-fault accounts receivable. Q: Do you fund self-pay receivables? A: No. Q: How do you determine what the Net Realized Value (NRV) of the receivables are? A: We must do an audit and calculate the average percentage of collectible receivables within recent months, usually 4 to 6 months of collectible history to establish your NRV. Q: Do you charge a due diligence fee? A: Yes, this is to cover the cost of the audit and other details that will be explained in our presentation. Q: Do you provide a billing and collection service with the receivable finance program? A: Yes. Q: Do you have a minimum time that the program has to be in place? A: Yes, At least one year. Q: How does my billing company or our in house office sends you what we electronically uploaded for billing? A: We supply the integration that makes a file copy of your uploads and forwards the exact information to us. This can be explained with more detail. Q: I understand that Medicare/Medicaid receivables are not assignable, how are we supposed to assign them to a factoring company? A: We have to establish a lock-box under your business name, and then forwards the funds to us. More details can be obtained on this issue. Q: I own a temporary employment nurse-staffing agency, do I qualify under your medical receivables program? A: We have a program for staffing agencies in general. If your business invoices to a commercial account and not Medicare/Medicaid or HMO's, then you would fall under our normal temp-staffing funding program. Request a proposal for Medical Temp-Staffing Factoring. |
ACCOUNTS RECEIVABLE PURCHASING FACTORING QUESTIONS AND ANSWERS DEBITOR-IN-POSESSION FINANCING
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