BRT Financial - Frequently Asked Questions

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Receivable Factoring F A Q' s

Frequently Asked Questions

Many members of the health care community, be they doctors, nurses, home health care providers, etc. may not be familiar with the concept of receivables financing as a strategic business option as a remedy to cash flow issues. For these people, we have created the following questions with answers for purposes of educating health care providers to options which they may have at their disposal.

1. What is receivable factoring?

2. How does the purchase of my receivables resolve my cash flow problems?

3. What will it cost me?

4. Would you become a partner in my practice?

5. How is having a factor purchase my receivables better than taking out a loan at my bank?

6. Is the purchase of receivables considered a short or long term solution?

7. If I were to sign on as a client, how long until my cash flow problems disappear?

8. Is there a downside to purchasing receivables?

9. Why is factoring the preferred choice when considering the sale of my receivables?

10. What size practices do you typically fund?

11. Are there any hidden fees?

12. What is your turnaround time?

13. What Type of medical practices do you purchase receivables from?

14. How long of a commitment does this represent?

15. How quickly can you provide a preliminary indication regarding our working together?

16. Which claims are eligible for payment?

17. What are the major phases within the process of our working together?

18. Do you take over the billing function within my practice?

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1. What is receivable financing?

Receivable financing is when a primary funding source purchases your accounts receivable. You get paid immediately for the amount of the receivables purchased, no longer having to wait the 60-90 days for insurance carriers to make payments. A fee, or discount, is generally included in the transaction.

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2. How does the purchase of my receivables resolve my cash flow problems?

You receive payment immediately and therefore are able to utilize the cash in ways that will strengthen your business; e.g. advertising, purchasing new equipment, bringing in additional personnel, etc.

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3. What will it cost me?

As one might expect, the costs can vary depending on a variety of factors including the average size of the receivable, average turnaround time, size of the practice, etc. The only reliable approach to learning your specific costs is to provide us specifics of your practice and have us determine your cost based on those figures; in other words, it is best to complete our application for a free quote.

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4. Would you become a partner in my practice?

No, the relationship the Factor would establish with your practice typically lasts for one year and is renewable by both parties. Following the initial purchase of your current receivables, the Factor will continue to purchase your receivables generated for each successive week. Our role in the practice would be directed by you; if you want us to be invisible, we can be. If you wish us to be more active with billing/collections, we can. You decide.

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5. How is having a Factor purchase my receivables better than taking out a loan at my bank?

A significant difference is that a loan at your bank is reflected on your balance sheet as debt, whereas having your accounts receivables purchased is a prudent use of your assets, ergo, the term asset-based lending, in which, no debt is placed on your balance sheet. In addition, while incurring debt at your bank requires repayment of the debt with cash, receivables financing requires no repayment and no cash drain. Each successive week generates new receivables which we continue purchasing, thereby providing you with a reliable stream of cash.

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6. Is the purchase of receivables considered a short or long term solution?

It could be both depending on how it is utilized. It provides an immediate infusion of cash, which solves the immediate crisis of poor cash flow and provides for regular cash flow throughout the course of the year.

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7. If I were to sign on as a client, how long until my cash flow problems disappear?

Once approved, we can wire transfer the funds into your business account within hours of our decision. This amount would be the initial funding and provide you with an immediate infusion of cash. The subsequent funding would then occur on a weekly basis, thereby providing you with a regular stream of cash.

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8. Is there a downside to purchasing receivables?

NO. What occurs is that you gain the quick influx of cash you need to increase your practice's growth. This enables you to utilize the funds without waiting for payment from insurance carriers, placing you in position to better pursue improvements to your practice: additional personnel, increased advertising, taking advantage of cash discounts, improving your credit rating, etc. All of these steps would be impossible without the cash realized from this process. How many ways can you think of that having extra cash flow can improve your practice!

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9. Why is a Factor the preferred choice when considering the sale of my receivables?

We can fund within as little as three weeks of our receipt of your completed application. There is no debt placed on your balance sheet, which is a good thing if you may need any different additional funding.

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10. What size practices do you typically fund?

Typically starting from $30,000 or more of net billings per month.

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11. Are there any hidden fees?

NO. All fees are stated up-front on your rate sheet. There are no fees to send in with your application. Quotes are free.

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12. What is your turnaround time?

As little as three weeks following our receipt of the completed application. We are committed to getting an answer back to you as quickly as possible. If an arrangement is delayed, often it is due to additional time to get information to us. The sooner we receive the required information, the sooner we can act upon it. An on-site due diligence visit is required prior to the final decision being reached. This is to confirm the information submitted in the application as well as to perform other due diligence activities.

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13. What type of medical practices do you purchase receivables from?

Physician private practices, group practices, clinics, DME providers and other providers within the medical arena. We do not purchase receivables for dentistry, chiropractic, and/or optometry.

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14. How long of a commitment does this represent?

One to five years typically.

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15. How quickly can you provide a preliminary indication regarding our working together?

How does 48 hours sound? We are committed to responding within 48 hours to those who complete an application.

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16. Which claims are eligible for payment?

Most third party medical claims of qualified insurance carriers with the exception of Workers’ Comp, dental, optometry, and personal injury.

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17. What are the major phases within the process of our working together?

The first phase is gathering all the information via the application packet. Once evaluated, if accepted, we issue a Letter of Intent which outlines the framework for how we could provide funding to you. Following our receipt of the signed Letter of Intent, we schedule the on-site due diligence visit and following that, if accepted, the initial funding occurs. Subsequent funding occur on a weekly basis as we continue to purchase the receivables you generate.

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18. Do you take over the billing function within my practice?

Your billing and collections functions remain under your control. We can help you with these functions since our Factors employees are experienced in medical billing and collections.

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