Part One of Three by PRN Funding

In a world where it is becoming increasingly more difficult for a medical coding service to receive timely payments from their customers, accounts receivable factoring can come to the rescue. Selling their invoices at a discounted rate, also known as factoring, gives medical coding services the money they need to help maintain and grow their medical coding operations. 

Instead of waiting 30, 60, 90 days or longer for payment from their customers, factoring provides the cash needed to meet payroll, pay taxes, purchase software and/or increase staff.

And all of this can be accomplished without increasing debt on a firm's balance sheet, which could limit future financing alternatives. Factoring is best be utilized to bridge the gap between when an invoice is issued and when payment is received.

Accounts Receivable Factoring

Immediate cash through factoring is considered to be a great tool for new and growing businesses in the health care industry. Instead of waiting 30, 60 or 90 days for payment from hospitals, physicians' offices, nursing homes and other healthcare institutions, businesses can receive cash within 24 hours for goods or services; they do it through the sale of their accounts receivable.

Another reason why medical coding services should look into selling their receivables is that factoring companies do not base their funding capabilities on a business owner's personal credit or even the company's credit history. Rather, factors are most concerned with the creditworthiness of the medical coding service's clients, who are also called account debtors; to pay them after the invoice has been sold. A traditional bank, on the other hand, would be less concerned with the service's customers. From a banker's perspective, it's the business owner's personal credit and the company's operating and financial history that will determine whether or not they would approve any loan amount.

With that said, there are literally thousands of factoring companies to choose from, all of which offer distinct advantages and disadvantages. The most important question to keep asking while searching for an accounts receivable factor is: “Will this factor best be able to meet my company's needs?”

Keeping that key question in mind, factors can generally be divided into three different operating categories. First, there are large factors that operate nationally and are able to fund clients across numerous different industries. These factors usually work out of multiple offices, and they are set up to cater to the needs of very large businesses. Because of their size and national presence, these factors are capable of funding almost any kind of company, from staffing to manufacturing to transportation. These factors are true generalists both across industries and geographic regions.

Then there are some factors that focus their operations in one specific geographic region. These smaller local factors have a home field advantage so to speak, in which their clients find comfort in the fact that their factor is literally around the corner. These factors will generally fund a wide variety of businesses; however they will all be concentrated in a definable geographic region.

The final category is comprised of factors that concentrate their funding in one specific niche, offering a heightened level of industry expertise to their clients. Their customers are generally national in scope, but are focused on a small handful of industries. These factors' clients feel more comfortable knowing that their funder understands the unique characteristics of how their industry operates. PRN Funding is just one example of an industry-specific factor because we focus on funding the healthcare vendor industry, namely medical coding services, medical staffing agencies, medical transcription services and medical supply businesses.

The size of your business, the services/products that you provide and whom you sell to all play a part in choosing between the three types of factors. Whether or not you should go with a general or industry-specific factor, a national or a local one, one that funds larger companies or one who works with start-ups all depends on what you want for your own company. It all goes back to that original question, “Will this factor best be able to meet my company's needs?”

Stay tuned for the next article in this three-part series, which will discuss the differences in rates and fees among factors and teach you how to compare and contrast to find the best factor for your medical coding business.

PRN FACTORING Provides Immediate Cash Flow!

  Read Part Two

About PRN Funding:
Philip Cohen is the founder and president of PRN Funding, LLC, which is an extraordinarily focused niche player in the health care services funding market place. Through a process known as factoring, PRN Funding provides medical coding 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 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 info@prnfunding.com . Please visit PRN Funding, LLC on the web.