Recently we came across a staffing company providing skilled nurses to take care of patients in skilled nursing facilities (nursing homes), assisted living facilities, hospices and hospitals. Although this initially appeared to be a healthcare factoring transaction ultimately we saw that the payors were not insurance carriers but rather the facilities themselves.
These types of facilities are very slow payors. Although their contracts with the staffing company ware not “pay when paid,” the facilities non-the-less waited to be paid by the insurance carrier or Medicare/Medicaid before they paid the staffing company. Given that this was a commercial factoring transaction since the payor was a business not an insurance carrier, and the accounts receivables extended will into the 90-150 day aging buckets, most commercial factors would pass on this opportunity.
Healthcare factors such as Xynergy Healthcare Capital have the risk tolerance to evaluate this type of transaction and even get it funded. We saw that although the payors were going out very long, the invoices were being paid not longer than 150 days. Given also that healthcare factoring sees this profile very often, we proposed a factoring facility for this applicant. At this time the client is reviewing the transaction and will hopefully sign and return the proposal.
There is a significant benefit to working with a healthcare factor in that they can do both commercial and healthcare where most commercial factors will not have that kind of capability. Additionally, payment profiles such as this one, may be funded by a factor specializing in these type of long-paying debtors.