A true sale is a transaction in which a seller transfers full legal ownership of an asset, such as an insurance claim, to a buyer, so the asset leaves the seller's books and the proceeds are not borrowed money.
What it means
A true sale turns on whether ownership actually changes hands. In a true sale, the buyer takes on the risk and reward of the asset, and the seller has no obligation to pay anything back. That is what separates a sale from a borrowing dressed up to look like one, where the asset stays the seller's and the cash is really a debt secured against it.
Courts and accountants apply the same test: who bears the risk of non-payment. If the buyer cannot come back to the seller when the asset underperforms, ownership has truly transferred and the transaction is a sale. If the seller remains on the hook, it is treated as secured borrowing, not a sale.
Because the proceeds of a true sale are not borrowed, they do not appear as a liability. The seller records cash received for an asset sold, with no repayment schedule, no interest, and no debt added to the balance sheet.
Why it matters for your practice
For a medical practice, a true sale keeps your balance sheet clean. The capital you receive is payment for an asset you sold, not money you owe, so it does not show up as a liability or count against you when a lender or landlord reviews your books. That distinction protects your borrowing capacity for the times you actually want a line of credit.
How this relates to Copay
When Copay purchases your eligible insurance claims, it is a true sale, not a loan. Ownership of the claim transfers to Copay, you receive the proceeds the next business day, and there is no repayment, no interest, and no personal guarantee. The cash is yours to keep, and a denied eligible claim is Copay's loss.
Written by Eitan Glick, CEO, Copay Inc.
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