One may think that a business being paid in 14 days certainly does not need factoring. This is a conclusion that makes sense on the surface, but let’s look at the reality.
About a year ago, a home healthcare provider billing Medicaid in the South-Central U.S applied for a factoring facility with us. At that time, she was being paid in seven business days. Her cash flow worked to some degree and she had no need for accelerated payments. However, the state sent notice to these providers that beginning immediately the state will begin to pay in two weeks –virtually doubling the waiting time to get their much needed cash. The agency was growing, seeing more patients every week and suddenly the cash flow was not enough to sustain the increased business activity.
To illustrate: suppose the agency was seeing 30 patients during one week and 35 during the next. Every Friday the care givers get their paychecks, and one can clearly see that the new services provided during the second week (35 patients) would not be paid until 14 days thereafter. Needless to say, the caregivers that provided these patients with services had to be paid and could not wait the 14 days. Enter Xynergy Healthcare Capital.
Our broker introduced the client and we did the conference call immediately. During that call we discussed the new payment plan being implemented by Medicaid in that State. We went right to work and within a day received our application and supporting documents. Underwriting and verifying data for Medicaid providers is quite easy to perform given that all billing is done through a state portal to which we obtain access. We had this applicant funded very quickly and to date she has doubled her business. Currently, she is looking to purchase other home healthcare agencies in and around her area of operation.
Thought for the day: Not everything is as it appears. In factoring, every situation is unique to that client, and this is especially true in the healthcare niche. At Xynergy Capital Group, we look at all of the possibilities for each applicant and try to work within the boundaries of our covenants and commons sense to make “it” happen.
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