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Useful Advices - Is Invoice Factoring an Affordable Business Financing Solution?
In short, yes. Provided that your company meets certain criteria.
Invoice factoring has been gaining popularity as
Invoice factoring has been gaining popularity as
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
a tool to finance growing businesses. It is a solution that accelerates payments from slow paying clients, freeing
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
up cash flow and allowing companies to grow. By eliminating the uncertainties of when they’ll be paid, business ow
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
ners can use factoring to stabilize their business and put it on a growth path.
However, factoring is not for ever
However, factoring is not for ever
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
one. For factoring to work, your business must meet certain criteria:
1. It must be established and have commercia
1. It must be established and have commercia
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
or government (not consumer) sales
2. Your profit margins must be at least 12% or higher
3. Your biggest
2. Your profit margins must be at least 12% or higher
3. Your biggest
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
problem must be that clients are taking too long to pay their invoices
If you fit these criteria, then there
If you fit these criteria, then there
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
s a chance that factoring financing will be a good solution for your business. It may not be as inexpensive as a bu
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
siness loan, but certainly will be significantly more flexible and easier to obtain.
Factoring will help you if:
Factoring will help you if:
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
. You are turning away orders because you lack the cash flow
2. You risk missing key payments (rent, suppliers
2. You risk missing key payments (rent, suppliers
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
payroll) because of cash flow
Factoring transactions are relatively simple. Once you invoice your client, you
Factoring transactions are relatively simple. Once you invoice your client, you
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
sell your invoice to the factor, who advances you up to 85% (on average) for your invoice. 15% is usually kept as
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
cushion to handle potential issues with the invoice. You get immediate funds from the advance while the factoring
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
company waits to get paid. Once the client pays the invoice, the factoring company will rebate the 15% less their f
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
e.
Factoring costs can vary depending on your financed volume, credit quality of your clients, payment cycles and
Factoring costs can vary depending on your financed volume, credit quality of your clients, payment cycles and
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
ndustry. Generally speaking, factoring will cost 1.5% to 3.5% per month. However, most factors break their pricing
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
in smaller ten-day increments, making cost more attractive. So a factor that charges 2.7% per month, would actually
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
charge you 0.9% for every ten days the invoice is outstanding.
As you can see, invoice factoring is a reasonable a
As you can see, invoice factoring is a reasonable a
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
lternative to other financing products, provided that you can meet certain criteria. Qualifying for invoice factori
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
g is very easy, the biggest requirement is that you do business with credit worthy commercial or government clients
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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