Accounts receivable financing is a category of arrangements in which a business raises capital against its unpaid invoices or claims, either by borrowing with the receivables as collateral or by selling the receivables outright.
What it means
Accounts receivable financing covers two structurally different things that are often lumped together. The first is borrowing: a lender advances money and takes the receivables as collateral, and the business repays the advance with interest. The second is purchase: a buyer pays for the receivables and takes ownership of them, so there is nothing to repay.
The other variable is recourse. In a recourse arrangement, if a receivable goes unpaid the business has to make the provider whole, by buying the receivable back or repaying the advance. In a non-recourse arrangement, the risk of non-payment sits with the buyer, and a denied receivable is the buyer's loss.
These distinctions matter more than the umbrella term suggests. Two arrangements both called accounts receivable financing can have opposite effects on whether you carry debt and whether you can be charged back for a claim that never pays.
Why it matters for your practice
For a practice owner, the label tells you almost nothing. What matters is whether you are taking on debt and whether you can be charged back later. A recourse arrangement secured by your receivables puts a liability on your books and leaves you exposed if a payer denies a claim. A non-recourse purchase does neither, so read the structure, not the name.
How this relates to Copay
Copay does not lend against your receivables. Copay purchases your eligible insurance claims outright, on a non-recourse basis, and pays you the next business day. There is no repayment, no interest, and no personal guarantee, and your billing team submits claims exactly as they do today.
Written by Eitan Glick, CEO, Copay Inc.
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