Unbilled Receivables

The Company
Founded in 2000, this Arizona-based healthcare-related company provides individualized, in-home assistance to older adults and others with special needs. The company contracts with various agencies in Arizona that the state uses to administer government health benefits. The administering agency approves prospective clients for services and then refers them to the Company.

The Situation
Following an eight-year banking relationship, the bank informed the Company’s owners that due to its internal issues, it would no longer be able to provide the existing line of credit. The owners were asked to secure new financing.

The Solution
This Company is comprised of three affiliates – one that did not require financing, one that is all Medicare billing (which Celtic Capital referred to another lender who specialized in Medicare-related financing) and the third, our client, a supplier of in-home care.

Typically, Celtic Capital does not finance companies in the healthcare sector, however, this situation was a bit different and we explored all possibilities to see if we could work something out…and we did. The quirk requiring a solution was that of unbilled receivables. The unbilled A/R represented work that has been completed, entered into payroll system and approved for billing but has not actually been billed. It takes up to two weeks for billing to occur because a separate system is used and data must transfer from the payroll system to the billing system. As the information necessary to bill the referring agency has already been entered and approved, we agreed to lend against these unbilled receivables.

The Result
Celtic Capital’s willingness to think outside-the-box and look for a solution enabling us to lend against unbilled receivables led to this deal’s successful closing. With our $2M A/R Line of Credit, the Company paid off its bank and is effectively utilizing the Line for payroll advances and working capital.