东莞出口企业应收账款问题的探讨(开题报告+任务书+英文文献翻译) 第3页
Avoiding potential problems when selling accounts receivable - accounts receivable financing
Healthcare Financial Management,May,1996 by Donald Hayers, Timothy.Kincaid
PATIENT ACCOUNTS MANAGEMENT
Accounts receivable financing is a potential tool for managing a provider organization's working capital needs. But before entering into a financing agreement, organizations need to consider and take steps to avoid serious problems that can arise from participation in an accounts receivable financing program.
For example, the purchaser may cease purchasing the receivables, leaving the organization without funding needed for operations. Or, the financing program may be inordinately complex and unnecessarily costly to the organization. Sometimes the organization itself may fail to comply with the terms of the agreement under which the accounts receivable were sold, thus necessitating that restitution be made to the purchaser or provoking charges of fraud.
These potential problems should be addressed as early as possible - before an organization enters into an accounts receivable financing program - in order to minimize time, effort, and expense and maximize the benefits of the financing agreement.
Prior to the late 1980s, accounts receivable purchase programs were of limited use and availability to provider organizations because retrospective reimbursement practices dominated the healthcare industry. Accounts receivable financing programs began to appear when prospective reimbursement policies forced provider organizations to become more adept at managing their financial resources. The drive toward managed care only has accelerated the need for creative financing mechanisms to improve cash flow as well as fund asset acquisitions and joint ventures.
The growth of accounts receivable purchase programs initially was slow, in part because executives believed the sale of accounts receivable would be perceived as a sign of financial weakness in their organizations, and in part because this type of financing mechanism was not well understood in the industry. Since 1990, however, there has been a market for accounts receivable purchase programs among healthcare providers that recognize the need for a vehicle for improving cash flow. An increasing number of nursing homes, home health care providers, psychiatric/alcohol and substance abuse facilities, and acute care hospitals are entering into receivables purchasing programs.
Benefits for providers
The objective of an accounts receivable purchase program is to provide immediate funds to healthcare providers so they do not have to wait to obtain capital until receivables are collected. The resulting acceleration of cash flow allows the provider to reduce payables, prepay accounts to obtain discounts, or pay off tax liens and other debts that threaten the financial stability of the business. It also improves the balance sheet. With a properly structured sale of accounts receivable, a provider can remove
www.751com.cn the receivables that have been sold and substitute cash without recording any significant liability other than the liabilities that may arise as a result of failure to comply with the terms of the sale agreement.(a) In addition, accelerated cash flow provides a source of funds from which the seller can make acquisitions of other businesses, real estate, or equipment.
The availability of this type of financing also is important to providers because it provides funds when existing covenants restrict additional funded debt or when other sources of financing are unavailable because of the organization's poor financial condition. The financial condition of a provider organization is significantly less important to a purchaser of receivables than it is to a lender. Unlike a loan from a lender that is secured by accounts receivable, the purchase of receivables insulates the purchaser from a provider's bankruptcy. For example, accounts receivable that have been sold are not part of a provider's bankruptcy estate. The purchaser therefore does not have to adhere to the automatic stay that is imposed by bankruptcy laws. The purchaser also is not subject to the loss of any overcollateralization that may have been structured into the financing program.
Program structure
Accounts receivable purchase programs differ in complexity and cost; however, from the perspective of the healthcare provider, their basic structure is fairly standard. Under a purchase program, a provider organization sells its accounts receivable to an entity that has been established for the sole purpose of purchasing the receivables. Usually, the purchasing entity is controlled by the bank or firm that sponsors the program, and the entity funds purchases by using the receivables as collateral for loans or investments from third parties or from an affiliated company. The purchasing entity on occasion may be controlled by the healthcare provider. In such circumstances, the entity obtains funds for the purchase of receivables through loans made by the program sponsor.
Typically, as a result of the sale of accounts receivable, a provider receives a sum ranging from 50 percent to more than 80 percent of the expected value of the receivables upon closing of the sale. All or a portion of the remaining expected value of the receivables is handled in one of four ways: as a (1) deposit in a reserve account that is controlled by the purchaser; (2) subordinated participation interest in the receivables that now are owned by the purchaser; (3) secured or unsecured claim against the amount that is to be collected by the purchaser; or (4) a combination of these options. In programs utilizing reserve account deposits, the amount received by the seller at closing plus the amounts that are deposited generally are equal to 97 percent or more of the expected value of the receivables.
Any amounts in excess of the expected value of the accounts receivable that are collected by the purchaser are treated in the same ways. These amounts are paid to the seller upon collection; the sums are reduced by program costs and other factors related to the terms of the particular program.
Purchasers of accounts receivable require providers to assure, through representations and warranties, that the receivables are collectible and to repurchase, replace, or pay for losses sustained when a receivable is not collectible. Purchasers nevertheless stop short of requiring providers to guarantee that the receivables will be collected. A guarantee raises questions as to whether the transaction is a purchase and sale or simply a loan that is secured by the receivables.
From the standpoint of the purchaser, it is important for the transaction to be treated as a purchase and sale (and not as a loan to the provider that is secured by the receivables) in order to assure that the bankruptcy of the provider does not interfere with the purchaser's rights to the funds collected. Such assurance may be more theoretical than practical, however, when collections are delayed in a bankruptcy pending a ruling by the court as to whether the transaction is indeed a "true sale."
Potential pitfalls
Although accounts receivable purchase programs offer benefits to the seller, they pose risks to both the seller and the purchaser. The financial effect of these risks to providers may be substantive when the purchaser stops buying accounts receivable, the purchase program is too complex and costly, the provider terminates participation in a program too precipitously, or the provider fails to comply with the requirements of purchase.
Cessation of purchasing. The proceeds from a sale of accounts receivable usually are used by the seller for designated purposes within a relatively short period of time. Collection of a purchased receivable may provide some additional funds for the seller, but those funds are subject to reduction for offsets, fees, and other charges imposed by the purchaser and usually are insufficient to provide for the daily cash needs of the business.
Accordingly, the seller generally needs to continue selling accounts receivable to support its ongoing working capital needs. In recognition of this need, the purchaser customarily provides some assurance that it will continue to purchase the seller's receivables.
The purchaser will cause the provider to suffer considerable financial strain if it does not purchase receivables on a regular basis. The purchaser nevertheless may stop purchasing receivables for several reasons. One reason is to compel the seller to comply with the terms of the sale agreement. A purchaser may stop buying receivables, for example, if the seller fails to send required financial statements after repeated warnings. A purchaser also may suspend purchases if the seller does not deliver funds received from payers on receivables that have been acquired by the purchaser. Failure to deliver funds has criminal implications. Sellers of accounts receivable can avoid this problem by recognizing the importance of complying with the obligations that have been imposed on them under the terms of the sale of the receivables.
Another reason a purchaser may suspend purchases is if a lien is placed on a seller's accounts receivable by a third party, such as the Internal Revenue Service. If the purchase of accounts receivable occurs 45 days or more after a lien is filed, the sale is subject to the lien. The only remedy for purchasers that do not wish to assume such risk is to stop purchasing receivables until the problem is resolved.
While they are participating in an accounts receivable purchase program, provider organizations consequently need to be especially cautious of the possible imposition of a lien. They should pay outstanding debts or act to remove the lien as soon as possible. Providers also may ask lienholders to subordinate their liens to the interest of the purchaser. This type of arrangement may be acceptable if the purchaser agrees to pay a portion of the sale price for the receivables directly to the lienholder until the lien is discharged. Lienholders are more apt to agree to subordinate their liens if they are convinced they will not collect the full amount they are owed in the event the provider declares bankruptcy due to filing of the lien.
Yet another reason a purchaser may stop buying a seller's accounts receivable is because it has depleted its financial resources or cannot continue borrowing funds from a third party to fund the purchases. Purchasers that rely entirely on a single outside source of capital are particularly susceptible to restrictions on the availability of additional or ongoing funding imposed by the third-party lender. To ensure a steady stream of purchases, providers should conduct due diligence before they agree
上一页 [1] [2] [3] [4] [5] [6] [7] [8] [9] [10] ... 下一页 >>
东莞出口企业应收账款问题的探讨(开题报告+任务书+英文文献翻译) 第3页下载如图片无法显示或论文不完整，请联系qq752018766
