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When a medical coding service is considering selling their claims to a factoring company, it is important to introduce a few common factoring terminology. This is a quick reference guide presents some of the more commonly-used aspects of helping medical coding business owners navigate seamlessly throughout the factoring process
ACH (Automatic Clearing House) -. One method factoring companies use to electronically transfer funds into the account creditor. When ACH initiation, contributions electronically in the account to the account of the creditor on the next business day
Account Creditor – .. You, the customer, and provides medical coding services
Demand accounts – money that is owed on account creditor the services it has provided to customers on credit. The amount the invoice issued
Advance Rate -. Money provided immediately to the account creditor-expressed as a percentage of the total invoice amount. Often factoring companies go between 70-90% of invoices buy
Account Debtor -. (. Drive your client) Buyer medical coding services who is responsible for paying the bill,
Cash Flow -. Measurement of money coming into the business through the accounts and the money going out of business and trade and payroll
Insurance – property that is promised or given to the Funder to ensure discharge of an obligation account debtor
Discount Fee -. A fee assessed by a factor that purchases accounts. Traditionally, the discount fee is determined by the size of the account, the length of time it takes to collect money and credit customer
Face Amount or Face Value -. The total amount of the invoice.
Medical Coding Factor -. A company that provides operating capital to businesses through the purchase of their accounts
Medical Coding Factoring – Alternative funding arrangements, which factor buys accounts of a company advances a certain percentage of the invoice immediately and then collects on those accounts
Medical Coding Invoice – .. A legal bond that shows the amount of the customer to pay for delivered medical coding services
Non-Recourse – The period in which accounts purchased by the factor remain accounts factor and do not turn account creditor if unpaid due to an insolvency event. The factor accepts full credit risk for any and all accounts that buys this season
Notice -. The process of factoring business relationship with the account debtor that an invoice has been acquired by creditors and account to account debtor to pay Factoring companies directly
Recourse -. The time accounts purchased by the factor are able to revert to the account creditor if unpaid due to an insolvency event. The customer accepts full credit risk for any and all accounts that it sells to factor this season
Reserve -. The amount of money that is not immediately provided to the company factoring its accounts receivable when the account is purchased by the factor, expressed as a percentage of the total invoice amount. (Advance Rate + Reserve = 100% of invoicing)
Reserve Release -. The Reserve, minus the discount fee, is transferred by the factor to the client after payment is received
UCC (Universal Commercial Code) – The Act business
UCC-1 – .. financing statement (Form UCC1) files to perfect the security interest in named collateral
Keeping this medical coding elements concepts follow close on conversations with factoring company will help medical coding business owners better be able to speak and understand “Factoring language.” Using this article as a reference also allows medical coding business owners to save time by focusing on asking the right kinds of questions to find the best medical coding Factoring companies for their business.
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