bility to choose how long you want to factor. Still, other companies will require you to sign a term-contract for 12-24 months. If this is the case, the factor will also charge an early termination fee if the contract is broken before the term expires. Every company enters the funding equation at a different point. For example, where one business may only need to factor for a few months to get them through a small cash flow jam, another company may use factoring for years. So it's important that you take the time to think through how long you plan to factor your receivables, and be sure to consider the type of commitment you are comIn my previous articles, I've explained how medical staffing companies can benefit greatly by selling their receivables to a factor in order to increase their cash availability. Instead of waiting weeks or even months to receive payment for their services, healthcare staffing agencies can factor their invoices and get paid within days.

I have also discussed reasons why it's important to shop around and choose an accounts receivable factor who will best meet your agency’s healthcare staffing funding needs. I went over many different things to consider when choosing a payroll funding company, including its size, location and area of specialty (such as healthcare staffing invoice factoring). In addition, I explained some of the general economics to consider (discount fees and advance rates), as well as a range of common additional fees.

In the final part of this series, I will discuss differing terms of contractual agreements and what to compare, variations of the invoicing process and which scenarios would work the best for your healthcare staffing company. I will also review the various reporting capabilities that factors offer their clients.

As is the case whenever you enter into a legal business relationship with another entity, factoring companies will require that you sign a contract. It's important that you read through it and be sure to ask questions if you don't understand something because the contract outlines specific concepts and fees associated with different situations. One big thing to look for in a contract is whether or not the company has monthly minimums/maximums. For example, some factors will require that you factor at least $50,000/month, which shouldn't be a problem if you are invoicing over $100,000 every month. Keep in mind that most factors will implement a penalty fee if you do not meet the minimum monthly factoring amount. On the other hand, a smaller factor may not have a minimum amount, but they might have a maximum amount instead. So if a factor says that they can only fund up to $500 thousand in a month, and you know that your company does well over $1 million in sales every month, you will have to keep searching. Again, it all depends on your company's healthcare staffing financing needs and finding the appropriate factor that can meet those needs.

Another very important issue to look for in the contract is the length of time that you are required to remain in the factoring relationship. Some factors are more accommodating in this area than others, providing you the flexibility to choose how long you want to factor. Still, other companies will require you to sign a term-contract for 12-24 months. If this is the case, the factor will also charge an early termination fee if the contract is broken before the term expires. Every company enters the funding equation at a different point. For example, where one business may only need to factor for a few months to get them through a small cash flow jam, another company may use factoring for years. So it's important that you take the time to think through how long you plan to factor your receivables, and be sure to consider the type of commitment you are comf

f specialty (such as healthcare staffing invoice factoring). In addition, I explained some of the general economics to consider (discount fees and advance rates), as well as a range of common additional fees.

In the final part of this series, I will discuss differing terms of contractual agreements and what to compare, variations of the invoicing process and which scenarios would work the best for your healthcare staffing company. I will also review the various reporting capabilities that factors offer their clients.

As is the case whenever you enter into a legal business relationship with another entity, factoring companies will require that you sign a contract. It's important that you read through it and be sure to ask questions if you don't understand something because the contract outlines specific concepts and fees associated with different situations. One big thing to look for in a contract is whether or not the company has monthly minimums/maximums. For example, some factors will require that you factor at least $50,000/month, which shouldn't be a problem if you are invoicing over $100,000 every month. Keep in mind that most factors will implement a penalty fee if you do not meet the minimum monthly factoring amount. On the other hand, a smaller factor may not have a minimum amount, but they might have a maximum amount instead. So if a factor says that they can only fund up to $500 thousand in a month, and you know that your company does well over $1 million in sales every month, you will have to keep searching. Again, it all depends on your company's healthcare staffing financing needs and finding the appropriate factor that can meet those needs.

Another very important issue to look for in the contract is the length of time that you are required to remain in the factoring relationship. Some factors are more accommodating in this area than others, providing you the flexibility to choose how long you want to factor. Still, other companies will require you to sign a term-contract for 12-24 months. If this is the case, the factor will also charge an early termination fee if the contract is broken before the term expires. Every company enters the funding equation at a different point. For example, where one business may only need to factor for a few months to get them through a small cash flow jam, another company may use factoring for years. So it's important that you take the time to think through how long you plan to factor your receivables, and be sure to consider the type of commitment you are com

will require that you sign a contract. It's important that you read through it and be sure to ask questions if you don't understand something because the contract outlines specific concepts and fees associated with different situations. One big thing to look for in a contract is whether or not the company has monthly minimums/maximums. For example, some factors will require that you factor at least $50,000/month, which shouldn't be a problem if you are invoicing over $100,000 every month. Keep in mind that most factors will implement a penalty fee if you do not meet the minimum monthly factoring amount. On the other hand, a smaller factor may not have a minimum amount, but they might have a maximum amount instead. So if a factor says that they can only fund up to $500 thousand in a month, and you know that your company does well over $1 million in sales every month, you will have to keep searching. Again, it all depends on your company's healthcare staffing financing needs and finding the appropriate factor that can meet those needs.

Another very important issue to look for in the contract is the length of time that you are required to remain in the factoring relationship. Some factors are more accommodating in this area than others, providing you the flexibility to choose how long you want to factor. Still, other companies will require you to sign a term-contract for 12-24 months. If this is the case, the factor will also charge an early termination fee if the contract is broken before the term expires. Every company enters the funding equation at a different point. For example, where one business may only need to factor for a few months to get them through a small cash flow jam, another company may use factoring for years. So it's important that you take the time to think through how long you plan to factor your receivables, and be sure to consider the type of commitment you are com

factor may not have a minimum amount, but they might have a maximum amount instead. So if a factor says that they can only fund up to $500 thousand in a month, and you know that your company does well over $1 million in sales every month, you will have to keep searching. Again, it all depends on your company's healthcare staffing financing needs and finding the appropriate factor that can meet those needs.

Another very important issue to look for in the contract is the length of time that you are required to remain in the factoring relationship. Some factors are more accommodating in this area than others, providing you the flexibility to choose how long you want to factor. Still, other companies will require you to sign a term-contract for 12-24 months. If this is the case, the factor will also charge an early termination fee if the contract is broken before the term expires. Every company enters the funding equation at a different point. For example, where one business may only need to factor for a few months to get them through a small cash flow jam, another company may use factoring for years. So it's important that you take the time to think through how long you plan to factor your receivables, and be sure to consider the type of commitment you are com

bility to choose how long you want to factor. Still, other companies will require you to sign a term-contract for 12-24 months. If this is the case, the factor will also charge an early termination fee if the contract is broken before the term expires. Every company enters the funding equation at a different point. For example, where one business may only need to factor for a few months to get them through a small cash flow jam, another company may use factoring for years. So it's important that you take the time to think through how long you plan to factor your receivables, and be sure to consider the type of commitment you are comfortable making. Having an estimated length of time in mind will make it easier for you to find a funding company whose terms are conducive to your business' needs.

Also included in the contract will be details on the type of guaranty that the factor will require before funding your invoices. Although there are a few factors that will not require a guaranty, the majority of them will want either a personal guaranty, whereby the seller is personally responsible for any unpaid invoices, or a validity guaranty, in which the seller guarantees that all of the invoices that are sold to the factor are valid, were prepared after services were rendered, and that the customer has agreed to pay them.

Finally, it's necessary for you to understand what the invoicing process will be like after you have chosen a company to assist you with healthcare staffing funding. A question that I hear frequently is "How soon can I be funded?" The answer to this question can vary from days to weeks or perhaps months. In order to set up a company for its initial funding, a factor requires you to fill out and return legal paperwork, including an application, contract, and a tax information form. In addition, you may be required to send in a current accounts aging report, federal tax returns, copy of your trade name certificate or fictitious name filing, articles of incorporation and bylaws, customer lists, copies of invoices, copies of driver's license, a copy of a voided check, etc. In most cases, 5-7 business days is the average amount of time it will take to receive your initial funding. From there on, the funding process will most likely speed up to 2-3 business days after you present invoices to the factor. There are some factors that can deliver same-day funds via a wire transaction, but just be aware of the fact that there will be fees associated with the amount of time it takes for you to receive funds into your account. For example, a same-day wire transaction will often cost you more than an overnight ACH transaction.

Another topic involved with the entire funding process is what's known as the "reserve account." Reserve is the percentage of an invoice amount that the factor will hold onto until it receives payment from your customers. This reserve amount will eventually be released back to you once your invoices have been paid and the factor has collected its fees. For example, let's say that you have an 80 percent advance rate and 20 percent is held for reserve. Let's also say that your invoices were paid within 30 days, tr