Accounts Receivable Management FAQs

What is Forward Funding?

TVM's patent pending Forward Funding allows you to receive a tax deferred lump sum payment equal to the net value of your total current accounts receivable. Additionally, TVM will facilitate daily electronic deposits to your bank account equal to the net value of each day's billings. These funds are also tax deferred.

What do you mean by net value?

First, an advance ratio is determined so that you don't overextend your credit limit. The ratio is based on two factors: total collections versus total billed, and credit review by the bank. The net value and advance ratio could be as high as 100% of billings, or any lesser amount, based on the above. On a daily basis, the net value reflects the net total of debits and credits for a given day, with an applied advance ratio. For example: $1000 of billings, $200 of over-the-counter payments received, and an 80% advance ratio would yield a net value of $640.

Is Forward Funding the same as factoring?

No! Factoring is the advancing of funds based on the value of the receivable. It is managed by loan broakers and finance companies and is very expensive. In contrast, Forward Funding operates only from a credit line that we help you establish with one of our banks. The credit line is not based on the value of the receivable. Because we are not loan brokers and work only with banks, Forward Funding is less costly than factoring and will advance funds up to 100% of billings. This means doctors will receive funding that includes both patient and insurance portions. Commercial businesses will receive funding regardless of the customer.

Why should I want Forward Funding?

The first and most obvious benefit is the predictable daily leveling of your cash flow that takes place seamlessly and automatically. Second is the reduction in overhead and errors by eliminating keystrokes through automation. But Forward Funding brings even more.

Your accounts receivable are assets similar to a piece of equipment. However, in considering the realized value of an asset, we must consider the Return on Investment (ROI). If we were to buy a $100,000 machine but not use it, the ROI would be zero and the actual value of the asset will depreciate over time. The same is true for accounts receivable. As an asset, there is inherent value in your AR. But if it is left unrealized, the value is zero and the ROI decreases over time. Forward Funding can help you realize the value of your AR and allow you to leverage that value over time by seeking opportunities to increase the ROI.

How do I increase my ROI by using Forward Funding?

With TVM's Forward Funding you will receive tax deferred capital equal to the net value of your total AR. That means - unlike taxable ordinary income - you can invest 100% of the value of your money in hand in anything of your choosing. It could be equipment that would not only increase revenues, but also provide an immediate tax deduction and depreciation. It could also be used to fund a qualified pension plan, or a 401K excess that has fewer restrictions than the typical pension plan. The choice is yours. But keep in mind that when you invest in a tax deferred environment, all earnings are tax deferred and will compound over time. When the time comes to realize your return - so long as the investment terms meet regulatory guidelines - your investment gains will be taxed at long term capital gains rates. TVM's Forward Funding helps you take advantage of your investment opportunities and realize a greater ROI. Please review our section on Wealth Accumulation, and seek the advice of your financial advisor.

Can I use your services without Forward Funding?

Yes.

What if I want to repay the loan?

You can repay advances or the loan at any time.

Who bills my customers/patients?

TVM sends out all billing statements with only your name, address, and phone number on the statements. Payments will be mailed to First Premier Bank for processing. TVM will then automatically post and reconcile all payments directly to your files. The payments received will be electronically credited to your credit line if you are using Forward Funding. Otherwise, they will be credited directly to your bank account.

What happens if a customer/patient doesn't pay their bill?

There are a set number of days for each industry in which there will need to be a transaction (debit or credit): Healthcare is 90 days, commercial could be 120 days. Any account that exceeds the allotted number of days will be considered delinquent. A delinquent account will be debited from your daily advance for the net value of the amount due, and then transferred automatically (at your option) to a collection agency where they will be reported to all three credit reporting bureaus. All amounts collected will belong to you less the agency charge.

What if a patient has insurance?

We will advance funds for both insurance and patient portions. You will process the insurance payment as you always do. We will capture all information from the daily transaction report. You will deposit and keep the payment as always, and we will debit the amount of the payment from that day's advance.

As an option to the above, TVM can eliminate keystrokes and automate the posting and reconciling of all third party payments.

What if I don't want to send a billing statement?

Simply access the account file in the TVM database and click on Block Bill, and no statements will be sent.

What if I don't want to receive an advance?

Simply access the account file in the TVM database and click on Block Funds.

How do I correct erroneous entries to an account?

The TVM database will capture adjustments that are noted on the daily transactions report. Alternatively, you could access the account file in the TVM database and enter the changes.

What about Security?

As the administrator, you decide who can enter your files and for which purposes. Each person using the system will have an ID and their own passcode. You can change or delete privileges at any time.

The files that are uploaded to the TVM database are 128 SSL encrypted, will be backed up daily, and reside on a mirror image server for uninterrupted service. Additionally, TVM communicates with its banks through a virtual private network, and is one of the few non-bank entities with permission to transmit bank coded ACH files.

What is the cost?

There are two separate costs: the cost of funds, and the cost of processing. The cost of funds is at typical bank rates for a credit line, and only for those amounts outstanding. The cost of processing is determined by the volume of data and the number of active accounts. Processing charges only accrue for net balances due passing through the TVM database. This means that if you bill $50,000 per month, but collect $30,000 at the time of service/sale, that TVM charges would be based on $20,000. The typical costs could range between .5% for high dollar/low volume transactions and 4% for high volume/low dollar transactions.

What happens if I want to stop the service?

Simply notify us of your intentions. We will cease to order funds advances but will continue to bill your accounts receivable that are still in the TVM database for three additional months. Collected payments will be processed at First Premier Bank and repaid to your loan account until that account is fully paid. Any excess funds will be directed to your checking account. All new charges will be billed by your office and payments should be directed to your office. During the service period, all your account activity at TVM is available for review or downloading.

How do I get the reports to TVM, and are they secure?

We will help you download an FTP client that offers 128 SSL encryption. This simple software allows you to electronically transfer reports automatically to the TVM database in a secure manner.

How much training is involved?

Very little training is needed. We will help your staff upload the required starting reports. After that, all that is needed is a daily electronic transfer of your end-of-day transaction report and all new account demographic information.

How do I get started?

Please feel free to call us or send us an email from our Web site. We will contact you as soon as possible.

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