Category: Financing

As the Biden Administration takes office, the ongoing effects of the coronavirus pandemic and related economic downturn are the key issues that will substantially shape Medicaid coverage and financing policy in the year ahead.

This fact sheet provides information about the World Health Organization (WHO) and U.S. government funding and engagement with WHO.

This issue brief analyzes enrollment and spending trends related to the Affordable Care Act’s Medicaid expansion ahead of the coronavirus pandemic and examines potential consequences of recent enrollment increases.

In the last few years, biopharma companies focusing on psychedelic medicines have been springing up like mushrooms – magic or otherwise – and venture capital money is starting to follow.

Today sees the launch of the first investment fund in the UK devoted to psychedelic healthcare, with plans to invest in “revolutionary mind-altering medicines to treat illnesses including depression, addiction, anxiety and inflammation.”

The fund has been set up by London-based VC Neo Kuma Ventures, a new group formed by Sean McLintock, Clara Burtenshaw and Nick David in 2019. The co-founders say it has already attracted “millions of pounds” in investment, and will continue to draw funds through the first half of next year.

Last year Neo Kuma’s founders backed ATAI Life Sciences AG, a part owner of Compass Pathways, which is a UK-based company trying to develop medicines based on a synthetic version of psilocybin, the main psychoactive constituent in magic mushrooms.

In September, Compass became the first psychedelic medicine company to float on the Nasdaq, raising $127 million, and is now trading at a market cap of $1.98 billion.

Shortly after, US biotech Mind Medicine – already trading publicly on Canada’s Neo exchange – applied for a Nasdaq up-listing as it advances a suite of psychedelic medicines based on MDMA, LSD and ibogaine derivative 18-MC. It is going after disorders like anxiety, opioid addiction and adult attention-deficit hyperactivity disorder.

Around the same time, Toronto-based Field Trip Psychedelics went public on Canada’s CSE after it completed a reverse takeover of oil and gas company Newton Energy Corp, which followed an CAD 12 million private placement deal.

As well as offering ketamine-assisted treatment clinics, the company is also working on FT104, a novel synthetic hallucinogen for mental health disorders. Meanwhile, other players in the sector include Cybin – which has just acquired rival Adelia Therapeutics for just under $16 million – as well as Numinus Wellness and Verrian Ontario.

Data Bridge Market Research published report earlier this year suggesting that the psychedelic drugs market is projected to grow at around 16% per year over the next eight years to reach $6.85 billion in 2027, spearheaded by new therapies like Johnson & Johnson’s Spravato (esketamine) for treatment-resistant depression.

NeoKuma draws parallels with the medicinal cannabis market, citing research which suggests that in the US it has surged from around $2 billion in 2014 to an estimated $35 billion this year.

“As the medical benefits of psychedelics become more well-known and regulators steadily increase their embrace of these types of drugs, the industry is set for a boom,” says McLintock.

“While much of the conversation on psychedelics is taking place in the US, Europe is the true hub of the burgeoning psychedelic healthcare sector. We look forward to investing in the most exciting, high quality and scientifically-sound European players in the industry to facilitate their ground-breaking research.”

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UK digital health firm Sensyne has secured access to millions more anonymised patent records via an alliance with US clinical trial data specialist Phesi.

The new agreement comes after a string of access deals with NHS trusts for patient data, and coincides with a bid by Sensyne to raise £27.5 million (around $37 million) through a 90 pence per share placing.

The proceeds of that round – and possibly a second £2.5 million open offer that is also planned – will go towards “industrialising” its big data analytics and clinical artificial intelligence (AI) platform, with £10 million going towards buying a 10% equity stake in Phesi.

Oxford-based Sensyne uses patient data to improve drug development, disease understanding and clinical trial design, as well as to discover new drug targets, and also develops digital health software applications powered by AI such as GDm-Health for diabetes and CVm-Health for COVID-19.

Another £10 million from the fundraising will go towards building Sensight – a real-world, pharmaceutical R&D platform intended to analyse data more rapidly and cost effectively – while £6.5 million is earmarked for development of its Sense clinical AI engine for healthcare providers and payers.

“Currently, responding to questions about available categories of Sensyne’s data can take several weeks with clinical AI answers taking months to produce,” says the company’s fundraising prospectus.

“Investments into industrialising this process are expected to dramatically reduce these timescales to seconds and weeks,” it goes on.

It already has access to around 6.1 million UK patient health records – equivalent to around 10% of the country’s total population – and the new agreement with Phesi will add around 13.5 million international patient records from 320,000 clinical trials dating back to 2007.

Phesi provides Sensyne with the benefit of a different type of data set, according to Sensyne, namely anonymised clinical trials data and clinical investigator site information.

Once the transactions go through, Sensyne and Phesi will work together to offer “synthetic” clinical trial arms and clinical decision support tools combining trial and real world data, for an initial period of five years.

Sensyne’s approach has already resulted in several agreements with major pharmaceutical and biotechnology companies including Bayer, Roche, Alexion and Bristol-Myers Squibb, while Phesi also has “a strong list of clients having worked with multiple blue-chip pharmaceutical and biotechnology companies.”

Peel Hunt and Liberum Capital Limited are acting as joint bookrunners for the placing.

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UK digital health firm Sensyne has secured access to millions more anonymised patent records via an alliance with US clinical trial data specialist Phesi.

The new agreement comes after a string of access deals with NHS trusts for patient data, and coincides with a bid by Sensyne to raise £27.5 million (around $37 million) through a 90 pence per share placing.

The proceeds of that round – and possibly a second £2.5 million open offer that is also planned – will go towards “industrialising” its big data analytics and clinical artificial intelligence (AI) platform, with £10 million going towards buying a 10% equity stake in Phesi.

Oxford-based Sensyne uses patient data to improve drug development, disease understanding and clinical trial design, as well as to discover new drug targets, and also develops digital health software applications powered by AI such as GDm-Health for diabetes and CVm-Health for COVID-19.

Another £10 million from the fundraising will go towards building Sensight – a real-world, pharmaceutical R&D platform intended to analyse data more rapidly and cost effectively – while £6.5 million is earmarked for development of its Sense clinical AI engine for healthcare providers and payers.

“Currently, responding to questions about available categories of Sensyne’s data can take several weeks with clinical AI answers taking months to produce,” says the company’s fundraising prospectus.

“Investments into industrialising this process are expected to dramatically reduce these timescales to seconds and weeks,” it goes on.

It already has access to around 6.1 million UK patient health records – equivalent to around 10% of the country’s total population – and the new agreement with Phesi will add around 13.5 million international patient records from 320,000 clinical trials dating back to 2007.

Phesi provides Sensyne with the benefit of a different type of data set, according to Sensyne, namely anonymised clinical trials data and clinical investigator site information.

Once the transactions go through, Sensyne and Phesi will work together to offer “synthetic” clinical trial arms and clinical decision support tools combining trial and real world data, for an initial period of five years.

Sensyne’s approach has already resulted in several agreements with major pharmaceutical and biotechnology companies including Bayer, Roche, Alexion and Bristol-Myers Squibb, while Phesi also has “a strong list of clients having worked with multiple blue-chip pharmaceutical and biotechnology companies.”

Peel Hunt and Liberum Capital Limited are acting as joint bookrunners for the placing.

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This data note analyzes federal Medicaid outlays in federal fiscal year (FFY) 2020, before and during the COVID-19 pandemic. Both annual and month-to-month growth rates in federal Medicaid outlays increased during the second half of FFY 2020, reflecting the onset of the pandemic and enhanced federal Medicaid funds.

CatalYm has closed a €50 million ($59m) series B financing round to fund clinical studies of its immunotherapy targeting Growth Differentiation Factor 15 (GDF-15).

The round was led by Vesalius Biocapital III, with participation from Novartis Venture Fund (NVF), Wachstumsfonds Bayern, coparion and founding investors Forbion and BioGeneration Ventures.

Founded in 2016 as a spin-out from Wuerzburg University, CatalYm’s lead molecule CTL-002 is designed to neutralise the tumour-produced protein GDF-15. High concentrations of the GDF-15 in serum and tumour-micro-environment help cancers to evade the immune system and are associated with resistance to current therapies.

The therapy originated from research by company founder Professor Wischhusen, looking at similarities between how a tumour protects itself from attacks by the immune system and how foetuses grow during pregnancy with protection from the immune system of the mother.

“In both cases, the tissue is growing very rapidly and aggressively and there is a need for vascularisation, nutrients and to escape the immune system. In pregnancy, of course this is what is needed and allows a baby to grow. But if a tumour is doing the same then it is going to kill a patient,” CatalYm CEO Dr Manfred Ruediger told pharmaphorum. “A tumour often hijacks these mechanisms which benefit the foetus and that is how the whole story started.”

CTL-002 addresses three of the tumour’s immune suppressive mechanisms all involving the inhibitory effect of GDF-15 on the immunostimulatory LFA-1/ICAM-1 interaction. By neutralising GDF-15, CTL-002 is expected to enhance infiltration of immune cells into the tumour, improve priming of T-cells by dendritic cells and improve the tumour killing by T-cells and NK-cells.

The company is expecting to be at clinical stage by the end of the year. Proceeds from the series B raise will be used for a Phase I escalation trial. CatalYm will also test the compound in combination with approved checkpoint blockers. If shown to work with approved immuno-oncology drugs, it could benefit patients that relapse or are in refractory from current therapies.

According to Ruedinger, investors believed the clinical program had more potential compared to others in immunotherapy. “We are not another company activating immune cells or improving antigen exposure,” he said. “We are the only one which is working on the step where immune cells must leave the vessels which nourish the tumour and enter the tumour tissue properly. It’s fascinating for all of us and we are looking forward to the next stage.”

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Ireland-based Fountain Healthcare Partners has raised another €125 million ($131 million) for its third life sciences fund – 25% ahead of its target – and says it will pump most of the money into European therapeutics and medical device companies.

The latest cash injection adds to the €118 million initially raised by Fountain Healthcare for the fund in May 2019, and brings the total value managed by the company above the €300 million mark. The third fund is now closed.

The specialist life sciences venture capital shop – which has offices in Dublin and New York – said Japanese drugmaker Kyowa Kirin took part in the latest funding round, joining domestic and international institutional investors.

Three companies have already received investment from Fountain Healthcare’s third fund. That includes include France’s Inotrem, which is developing nangibotide in phase 2 testing for septic shock, and Dublin-based Priothera, which is developing immuno-oncology drug mocravimod in phase 2b/3 for acute myeloid leukaemia (AML) in partnership with Kyowa Kirin.

Another beneficiary is Dublin biotech Mainstay Medical, which recently claimed FDA approval for its ReActiv8 device for chronic lower back pain.

All told, Fountain Healthcare expects to make up to 10 investments in “predominantly private life science companies” with its third fund, mainly in Europe but also in the US.

The VC’s first two funds supported early-round financings some prominent emerging biotechs, including inflammatory disease biotech Inflazome, which was sold to Roche in September in a €380 million deal. Inflazome’s lead drugs inzomelid and somalix – both NLRP3 inhibitors – have cleared phase 1 testing.

Others included UK women’s health player KaNDy – snapped up by Bayer for $425 million upfront a few weeks ago – as well as drug delivery specialist Chrono Therapeutics and Opsona, focusing on autoimmune and inflammatory diseases, solid organ transplantation and oncology.

Dr Manus Rogan, co-founder and managing partner at Fountain Healthcare and a former executive at GlaxoSmithKline and Elan, said the company’s investment strategy “focuses on building a balanced portfolio of companies with complementary risk and return profiles within the life science sector.”

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Sarepta chief commercial officer Bo Cumbo has left to head up gene therapy venture – AavantiBio – with $107 million in backing from his former employer and three high-profile life sciences investors.

Rare disease specialist Sarepta is putting up $15 million of that first-round financing, with the remainder coming from Perceptive Advisors, Bain Capital Life Sciences, and RA Capital Management.

The new company – headquartered in the Boston area – is drawing on the gene therapy expertise of University of Florida researchers Barry Byrne and Manuela Corti.

It is focusing its initial efforts on the development of a gene therapy for Friedreich’s ataxia (FA), a rare, inherited neuromuscular disease caused by mutations in a gene called FXN that leads to impaired muscle coordination, as well as problems with the heart and central nervous system.

Earlier this year, three-year-old AavantiBio was awarded a $1 million grant from the US Muscular Dystrophy Association (MDA) to start producing the gene therapy, due to start a phase 2 trial later this year.

Cumbo’s eight years of experience at Sarepta – which sells exon-skipping therapies for Duchenne muscular dystrophy (DMD) and is thought to be at the forefront of developing a gene therapy for the disease – should have prepared him well to take AavantiBio’s lead programme forward.

He has previously worked as vice president of sales at Vertex Pharma, and had various commercial roles at Gilead Sciences. Commenting on the latest role, Cumbo said AavantiBio has “a unique opportunity to change the lives of those living with FA and other rare diseases”.

Sarepta CEO Doug Ingram said that Cumbo “built a first-in-class rare disease commercial organisation and has made tremendous contributions to Sarepta”.

He went on: “We look forward to continuing to work with Bo as he builds a strong AavantiBio team and advances therapies to treat FA and other rare diseases.”

FA affects about 1 in 50,000 people in the US, according to the MDA, but is considered to be a great target for gene therapy because it is linked only to mutations in the FXN gene.

That means replacing the defective gene with a working copy should – or correcting it in situ – could stop the disease in its tracks. FA typically starts in childhood, affecting males and females, but AavantiBio has said it intends to test its therapy in both paediatric and adult patients.

The disease varies in severity depending on the FXN mutation and whether the patient has one or two copies, but typically patients will be confined to a wheelchair within 10 to 20 years of diagnosis. Around 15% of cases are spotted after age 25.

There’s no approved therapy for FA yet, although one is on the horizon. Reata Pharma had been gearing up to file for approval of omaveloxolone as an FA treatment before the end of the year, but said recently it may need to run a second trial of the drug after discussions with the FDA.

Unlike a one-shot gene therapy, omaveloxolone would require continuous dosing to maintain its effects.

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This brief provides an overview and status update of the Medicare accelerated and advance payment program, which provided $100 billion in loans to Medicare providers in the spring of 2020 to compensate for revenue shortfalls due to the coronavirus pandemic. The brief describes who got the funds, and how these loans are distinct from other funds that providers received, which do not have to be repaid.

Swiss medical data specialist Sophia Genetics has raised $110 million in an oversubscribed funding round that will be used to boost its headcount and international presence and prepare to take its shares public.

Proceeds from the sixth-round of private fundraising will fund the growth in Asia and the US, where it already operates a subsidiary based in Boston, according to the company, which has raised $250 million since its launch in 2011. It will also be used to add to the capabilities of its data platform.

Sophia Genetics specialises in artificial intelligence-powered data mining tools that can sift through genomics data generated in DNA sequencing studies at academic institutions, and look for patterns that can be used to provide insights into diseases, guide treatment and signpost the development of new therapies.

In August, for instance, it launched a data-mining tool to try to unearth some of the many unknowns with the SARS-CoV-2 virus and predict how the COVID-19 pandemic will evolve in the coming months and years.

It is among a growing group of companies offering tools that help scientists to perform these complex genetic analyses, and its platform is already used by more than 1,000 healthcare institutions around the world, analysing 17,000 genomes a day.

“Since inception, we knew that leveraging a wide range of data modalities powered by cutting-edge technologies was key to sustainably deliver better outcomes to the global healthcare community,” said chief executive Jurgi Camblong.

“Now, with this new funding round, we can embark on the next stage of our development and take our collaborative approach further, delivering intelligent medicine together.”

Aside from hospitals and other healthcare groups, Sophia Genetics has started to attract biopharma partners, including ADC Therapeutics which tapped into its technology last year to identify genomic markers associated with clinical response to ADCT-402, a lymphoma drug.

Plans for a public listing are still in the rarely stages and Sophia Genetics says it will wait until its annual revenues top $100 million – expected in 2022 – before pressing ahead with an IPO on the Nasdaq.

The Series F round was led by aMoon, a health tech and life sciences venture fund based in Israel, with Hitachi Ventures, Credit Suisse, Pictet Group, Swisscom Ventures, Endeavour Vision, Generation Investment Management, Alychlo, Eurazeo Group, ACE & Company and Famille C Invest also named among the investors.

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Digital health startup Lyra Health has raised $110 million in fourth-round financing, raising its value above the $1 billion threshold for the first time since it was founded five years ago.

California-based Lyra provides mental health care services that employers can include in health care plans for their staff, and already features companies like eBay, Uber and Genentech on its customer roster.

Its platform connects employees to mental health professionals and supports them through treatment with coaching, medication management and self-care tools.

The $110 million Series D comes just a few months after a third-round fundraising that brought in $75 million, and brings the total amount raised by Lyra to $292 million.

Lyra says it is now pitching at revenues of around $100 million this year, boosted by what chief executive and cofounder David Ebersman describes as more interest than ever from employers looking to invest in better workforce mental health as the coronavirus pandemic rumbles on.

“In a normal year, companies generally wait until Jan. 1 to launch new health care benefits,” he writes in a blog post published this week which notes that the number of employers covered by its customers had doubled in the past year.  

“This year has been different. Many companies have decided their employees need better mental health services right now.”

Since the start of the COVID-19 crisis, Lyra has added 800,000 members, takings it tally to around 1.5 million.

The Series D was led by Addition and also included Adams Street Partners and existing investors, and the cash injection will be used to invest in new services such as Lyra Blended Care for conditions like depression and anxiety.

Ebersman describes the service as “teletherapy…that pairs video therapy sessions with personalised digital tools based on cognitive behavioural therapy (CBT).”

Blended Care was shown to reduce depression and anxiety symptoms in six weeks in a 385-subject study published in the Journal of Medical Internet Research last month.

“I believe we will look back on 2020 as a turning point in our collective recognition that the mental health status quo is not good enough,” says Ebersman, in a reference to data the company generated with the National Alliance of Healthcare Purchaser Coalitions in July which suggested that  83% of US employees are experiencing mental health issues.

“Too many people in need don’t have easy access to potentially life-changing treatment, “ he adds. The same National Alliance survey of 1,200 workers found that one in four said their employer does not support their mental health at all.

Image by Joakim Roubert from Pixabay

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Cambridge, UK-based Biofidelity has raised $12 million in first-round funding for its cancer diagnosis platform, which can detect mutations quicker than current approaches like gene sequencing.

The Series A comes just a few months after Biofidelity launched with seed funding from Longwall Ventures and private backers – as well as multinational diagnostics company Agilent.

Biofidelity’s molecular diagnostics platform stems from work carried out by its two founders – Dr Barnaby Balmforth, who serves as the company’s chief executive, and Cameron Frayling who is on the board of directors.

Both previously worked at Cambridge-based DNA sequencing specialist Base4 Innovation, where the technology was developed.

The company says its assays can detect as little as a single molecule of mutated DNA amongst the billions of normal molecules found in a patient sample, generating “fast, affordable, easy to interpret results.”

Crucially, the assays could become an option for the 95% of cancer patients who are currently excluded from next-generation sequencing (NGS) of their DNA because of “high cost, complexity, and slow turnaround times.”

In January, Biofidelity reported the results of an Agilent-partnered study of a test for mutations associated with lung cancer. This type of testing is usually carried out on lung tissue biopsies, which is an invasive and expensive procedure with a 10% failure rate.

The UK firm has claimed a 50-fold improvement in sensitivity with its ‘one-tube’ assay compared to FDA-approved diagnostics based on PCR technology. It also matched the performance of NGS assays, but reduced the number of steps needed from 100 to just four, speeding up the process.

Biofidelity says it will use the latest cash injection to speed up the development and clinical validation of assays for treatment selection and patient monitoring in oncology, and to bring them to market as quickly as possible.

It’s focusing initially on test panels for non-small cell lung cancer (NSCLC) and colorectal cancer, both of which are associated with a number of low-frequency genetic mutations that can guide the selection of drug treatment.

Longwall Ventures and Agilent have both returned to invest in the Series A, which on this occasion was led by BlueYard Capital.

“Delivering on the promise of precision medicine to improve outcomes for cancer patients relies on clinicians being able to precisely identify actionable genetic markers,” said Balmforth.

“Our assays will enable them to make the right decisions regarding treatment and to detect when a cancer has recurred or become resistant to therapy,” he added.

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Anglo-Austrian biotech F2G has raised $60.8 million in venture financing to help it bring a drug for life-threatening fungal infections through late-stage development and onto the market.

While these infections remain fairly rare, there is still a pressing need for new antifungals to provide treatment options when established therapies fail, and F2G is one of only a small number of companies working on new antifungal drug development.

The current armamentarium of azoles, echinocandins and polyene-based medicines sometimes lack efficacy and have dosing and tolerability issues. Meanwhile, rising levels of resistance to some of these drugs among fungal pathogens – particularly azoles – is on the rise because they are also used in agriculture.

F2G will use the cash injections from new and existing investors to fund registration trials of olorofim (F901318), the first in a new class of orotomide antifungal agents – as well as to prepare for marketing applications and commercialisation.

Orotomides target the fungal enzyme dihydroorotate dehydrogenase (DHODH), a different mechanism from that of the currently marketed therapies giving them fungicidal activity against a broad range of rare and resistant infections, according to F2G.

Olorofim is currently in a phase 2b trial looking at its potential to treat systemic fungal infections such as invasive aspergillosis, scedosporiosis, lomentosporiosis, fusariosis, scopulariopsosis, and coccidioidomycosis in patients who don’t have other treatment options. Data from that study is due around the end of this year or in early 2021.

The biotech claimed a breakthrough designation from the FDA last year for olorofilm, and says its drug is the only antifungal agent ever to have been awarded this status based on early tolerability and efficacy data, and that could lead to an accelerated review from the US regulator.

It also has orphan status as a treatment for coccidioidomycosis – also known as Valley Fever – a rare infection seen in US states like California and Arizona that is caused by inhaling dust laden with spores. The disease seems to be on the increase, for reasons that aren’t clear.

Meanwhile, there are also reports that invasive fungal infections like aspergillosis are being seen in some COVID-19 patients on ventilators.

The company is being incubated by Novo Nordisk’s venture capital arm Novo Ventures, and following the new financing round one of Novo Ventures’ partners – Naveed Siddiqi – has joined F2G’s board of directors in place of Martin Edwards, who is retiring.

If approved, olorofim could be the first drug in a new antifungal class in almost two decades, according to Novo Ventures, and “represents a very significant market opportunity in excess of $6 billion, in an area of high unmet clinical need.”

Novo was joined by Cowen Healthcare in the latest funding round, along with existing investors Morningside Ventures, Brace Pharma Capital and Advent Life Sciences.

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This brief provides an overview and status update of the Medicare accelerated and advance payment program, which provided $100 billion in loans to Medicare providers in the spring of 2020 to compensate for revenue shortfalls due to the coronavirus pandemic. The brief describes who got the funds, and how these loans are distinct from other funds that providers received, which do not have to be repaid.

The temporary boost in federal Medicaid funding enacted as part of the Families First Coronavirus Response Act (FFCRA) will soften the economic blow of COVID-19 on states, but is unlikely to fully offset state revenue declines or forestall budget shortfalls stemming from the pandemic, finds a new KFF analysis. The 6.2 percentage point increase in…More

This brief examines how much fiscal relief states can expect from the increase in the Medicaid FMAP under FFCRA under different assumptions about the duration of the relief, how the FMAP increase provides broad fiscal relief to states and the factors that affect how much relief is available across states.

With Lost Customer Opportunities, Revising Payment Plan Strategies Can Help Your Business Reach More Customers

Far too many customers are turned away and declined from services over shortcomings with credit. When you rely on traditional lenders, they only allow you to finance customers with good credit scores, which leaves you unable to provide services to customers who can’t afford your services. 

It happens almost daily: After spending 45 minutes on company time signing a customer in and running their information, you learn that they cannot qualify for a payment plan. No business can afford to waste time and money fussing with customers who don’t get approved. But you can save time and reach missed opportunities by exploring new customer financing options, to take on as many customers as possible.

The time for a change is now: Releasing their results in mid-June, researchers at McKinsey & Company found that 25-36% of small businesses in the US could close permanently as a result of customers lost due to the disruption by COVID-19 — unless they intervene by rethinking their current financial processes. Without any changes, businesses will inevitably remain in the same place.

Missed opportunities and a shrinking customer base is linked to flaws with common existing payment plan systems.

Flaws with Common Payment Plan Systems

Businesses miss out on opportunities due to credit scores, late payments, defaults, and other customer setbacks, but there are ways your business can accomodate customers by exploring new options with payment plan options — allowing you to provide service to any customer. 

A whopping 53% of customers are turned away because of credit scores, according to an analysis from a team of investigators at One Technologies. Plus, nearly a quarter of Millenials aren’t even aware of their own credit scores — meaning any potential customer who is 39 or younger in 2020. Moreover, according to the Consumer Financial Protection Bureau, around  26 million Americans are “credit invisible” because they have no credit history with a nationwide consumer reporting agency.

These barriers mean that over half of customers who are denied financing end up becoming missed opportunities for your business. Credit scoring drastically limits the pool of potential customers.

These barriers mean that over half of customers who are denied financing end up becoming missed opportunities for your business. Credit scoring drastically limits the pool of potential customers, but alternative options can help your business reach those customers who are typically denied based on credit scores.

You don’t have to accept the limitations that are commonly presented when processing payments through traditional lenders and in-house financing.

What Traditional Lenders Fail to Provide

Businesses lose potential customers who are denied financing by traditional lenders, because of insufficient credit and other barriers. The last thing a business needs is a limited customer base during a pandemic.

Traditional lenders tend to have relatively high application requirements, leading to more missed opportunities. Reaching the missing fraction of customers and expanding your customer base could translate to a recurring revenue stream for your business when you provide them the ability to go on a payment plan.

The concept of the credit score suppresses the most vulnerable population, leaving businesses unable to provide services for customers when they rely on traditional lenders’ vetting systems.

Common Problems with In-House Financing Payment Systems

In-house financing also presents its own set of problems for payment plan systems. Most businesses don’t have the resources to efficiently finance their customers. Imagine trying to explain to a customer that six months’ worth of payments haven’t gone through — because you simply didn’t have the time to monitor your contracts and outstanding payments.

Businesses often need to hire more employees in order to collect monthly payments at a reasonable rate. Since most businesses don’t specialize in collecting debt, this results in a higher default rate and lost revenue. Some businesses simply don’t offer enough payment plan options or their plans carry interest rates that disadvantaged customers are unable to bear. 

In-house financing rarely incorporates automatic payment systems that streamline the process and save time.

How Can You Expand Your Customer Base? 

There are several ways to set up alternatives to current payment plan options to increase your customer base. With the added complications and setbacks due to the ongoing COVID-19 pandemic — now is the time to reevaluate financing strategies.

Save time, money, and effort by implementing new procedures to streamline the process of payment processing and attract new customers. Converting missed opportunities with new payment options will not add risk — it will just add revenue and protect your business. Here are some ways you can maximize your customer reach with more payment plan options for your customers to choose from:

• Don’t limit your customer base with traditional lenders, who routinely deny customers based on credit scores.
• Create custom payment plans to provide more flexibility to your customers, and in turn, save thousands in recurring revenue.
• Decrease the number of employees by providing ways to send documents electronically and implementing automatic payment services.
• Expand financing options for customers who are denied based on credit scores.
• Consider Denefits payment plan options, where there is a 0% service fee for businesses: they get the exact amount they finance the customer for.

Learn more about how to collect your overdue payments for FREE. For a limited time, all payment plans made with Denefits Accounts Receivable are Guaranteed.

The post Take On More Customers Than Ever Before appeared first on Denefits.

Half of the 14 donor governments analyzed in the study decreased their spending on global HIV efforts from 2018 to 2019; six increased; and one held steady. Donor government funding supports HIV care and treatment, prevention and other services in low- and middle-income countries.

This report from KFF and The Joint United Nations Programme on HIV/AIDS (UNAIDS) finds donor government disbursements to combat HIV in low- and middle-income countries totaled US$7.8 billion in 2019, a reduction from the US$8 Billion in 2018 and nearly the same as the funding levels of a decade ago.

Are credit card processing fees cutting into your profit margin? Here are some tips to help your business save money.

Every time a customer pays for services or products with a credit card, the merchant has to pay a card processing fee. While the fee can often be negligible on a single transaction, the cost can add up with many purchases. According to payment industry newsletter The Nilson Report, the weighted average processing fees for American Express, Mastercard, Visa, and Discover credit cards were between 2.09 to 2.33 percent in 2017. 

When looking for a new payment processor, it’s important not only to find one with the lowest transaction fee, but one that allows your business to bypass the transaction fee. Some payment processors now offer the option to split or pass on the transaction fee to your customer, to save more money for your business.

Breaking Down Credit Card Processing Fees

Several different costs make up credit card processing fees:

Interchange fee: This is usually the highest cost associated with processing, collected by credit card issuers. The interchange fee is a percentage of the transaction, combined with an additional fixed amount. The fee can vary based on the card network, type (including business or rewards credit cards), payment processing method (card swiping or manual entry), and business type.

Service or assessment fee: This fee is paid straight to the credit card network (for example, Visa or Mastercard). This fee is smaller, and rates are usually lower for debit cards than credit cards. This can also sometimes include other fees, like foreign transaction fees.

Payment processor’s markup: The credit card processor also profits from payment processing by charging a small fee.

How can you save money on payment processing for your business?

Shop around for the best processor

It’s always wise to do some comparison shopping before you commit to any significant purchase. You should do your research and see which processors offer the best deal for your business. Before choosing a card processor, ask a lot of questions: what is the total rate with all fees included? Do you charge fees for cancelation or applications? While some processors may offer a lower rate, they might actually charge more in hidden fees.

Set minimum credit card sales

Especially for smaller businesses with small transactions, you can save more money by setting a minimum for credit card sales. With low price purchases, you can end up spending more than you can afford on processing fees. You can enforce your policy by setting up a sign at your shop by the register, so customers will know when making a purchase.

Split or pass on the transaction fee to your customers

While there are many businesses claiming to have the lowest transaction fees, not many allow the business to pass on the transaction fee. A company like Denefits will allow you to split or pass on the transaction fee to your customer, to save your business these additional costs. There is no signup fee or equipment required to use Denefits. Transactions happen through their mobile apps, web interface, and most importantly remotely. 

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The Hidden Costs of Accounts Receivable

Many businesses extend credit to customers, to provide the services and products they need. 

According to a 2019 report on the economic well-being of U.S. households, 33% of adults are either unable to pay their bills or are one modest financial setback away from hardship. 4 in 10 adults would have serious difficulty covering a $400 expense, and most commonly make payments on credit cards or borrowing from friends or family.

It can be difficult to turn away customers in need, and additionally difficult to turn away a customer who can pay at least on credit. However, carrying accounts receivable on the customer’s behalf will undoubtedly have a negative effect on a business.

When the business extends credit to customers without having a solution to collect accounts receivable, they take on administrative costs, opportunity costs, and the risk of heavy debt among other cost elements, according to a study by the Harvard Business Review.

Let’s take a look at the different costs of carrying accounts receivable and how they negatively impact a business.

Collect Accounts Receivable

Administrative and Time Costs

To manage your accounts receivable, a business owner or their staff will need to spend hours every week to manage accounts, call customers with overdue payments, update balances, and calculate the costs for your business. Especially for small companies, a sole proprietor or business with a small staff cannot afford to use time and resources on collection and accounting. In addition to labor costs, your business would have expenses for postage, paper billing, and payment processing.

The cost to carry every dollar of accounts receivable highly increases over time. At 30 days, the cost to carry accounts receivable is around 1.82%, according to the Harvard Business Review, which is relatively minimal. At 60 days, it increases to 10.29%. At 90 days, it hikes up to 19.74%. By 120 days, the true cost rises to over 15.00%. At that point, you essentially have a lost receivable.

Opportunity Cost

The opportunity cost is another factor to consider when determining the true cost of accounts receivable for your business. If your customer makes their payment earlier, your business can invest the money to generate more revenue. The more your customer delays paying their debt, the higher the opportunity cost will be.

To calculate the opportunity cost of the receivable, you can use this formula:

[(Accounts receivable x Rate of return)/365] x Days Sales Outstanding

When you calculate the opportunity cost, you can see how much this negatively impacts your company to carry accounts receivable. To lower the days sales outstanding, you can lower the cost for your business.

Risk of Bad Debt

If your business is unable to manage the accounts receivable, you’ll experience higher loss due to customer default. Your company will need to write off the invoices as bad debts. As we can see in the chart, the longer you carry accounts receivable, the higher the risk of bad debts. 

What can you do to protect your business and collect accounts receivable?

If your business already has a high volume of accounts receivable, we have some tips on how to protect your business in the future as well as how to collect on overdue payments:

• Set clear payment terms and policies. This will help protect your business and let the customer know the terms of agreement — and consequences if they do not make timely payments. Additionally, make sure to only provide services after you’ve received valid forms of payment. Keep a signed agreement and copy of ID of the cardholder.
• Hire an accountant. If you’re struggling to manage your customer accounts and overdue payments, hiring an accountant can take a load of stress off you and free up your time. An accountant can handle your finances so you’ll know what payments you’re owed and how it is affecting your business. However, you’ll need to consider the cost of taking on a full-time accountant or possibly paying a firm to take care of your accounts part-time.
• Provide the option for multiple payment methods. Your customer may not be able to pay in full immediately for the products or services you provide, but you can offer payment options so you don’t have to extend credit on the entire payment. This way, you can at least get partial money down and not risk a total loss if the customer defaults.
  • Allow your customer to pay partially with insurance or lenders if necessary.
  • Your business can use Denefits No Fee Financing to provide easy payment plans for your customer. Denefits will guarantee your payments.
• Use Automated Accounts Receivable to collect overdue payments.
  • Denefits offers the option for businesses to automatically collect accounts receivable using our innovative software. This service is completely free for businesses to use. For a limited time, you can add existing customers with outstanding payments to collect accounts receivable and Denefits will guarantee your payments.
• Hire collection services. As a small business owner, you likely do not have the time to continuously call customers week to week to collect payments. You can solve this problem by hiring professionals to collect for you. However, just like with the accountant option, you’ll have to consider whether you can afford to hire collection services and if this is a viable option for your business.

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Protect yourself from crowdfunding scams

Many people use crowdfunding platforms like GoFundMe to reach out to their social networks to help pay for much-needed medical treatment. Unfortunately, not every crowdfunding campaign is trustworthy. 

While crowdfunding can be a useful way to gather donations for people’s medical and emergency life expenses, it’s also a way to scam compassionate donors out of their hard-earned money. 

With sites like GoFundMe, there is no way to know exactly how your money will be used if you donate. This makes it difficult for people who are actually in need to receive assistance with their medical bills because donors are more skeptical of fraud. 

Over the past several years, there have been numerous false campaigns created on GoFundMe to scam sympathetic donors under the guise of helping people pay medical expenses:

• A New Jersey couple raised more than $400,000 through a fraudulent GoFundMe campaign to help a homeless good Samaritan and veteran — and all three were in on the scheme. In January 2020, the ringleader Mark D’Amico pled not guilty to federal charges, with 16 counts of conspiracy, wire fraud, and money laundering. The trio pleaded guilty in state court in 2019.
• For three years, a Canadian woman told friends and family she had a rare neurological disorder that took away her vision, voice, and ability to leave her home. In 2015, she was accused of faking a rare illness (chronic inflammatory demyelinating polyneuropathy) and deceiving her loved ones into raising more than $100,000 for medications and treatment she never needed or received.
  The GoFundMe campaign goal was set at $1.6 million before the account was shut down. It showed 553 separate donations, with some in the thousands of dollars. Many donors even opted to make regular monthly donations.
• In May 2018, a woman in Carson City, Nevada was sentenced to five to 12.5 years in prison for faking her son’s death to illegally solicit $2,000 in GoFundMe donations, cash, and gift cards. 
• Also in May 2018, a couple in upstate New York raised $3,334 on a GoFundMe campaign asking for donations to pay for medical bills for their son — falsely claiming he had terminal cancer. The boy’s parents were charged with a scheme to defraud and endangering the welfare of a child. 
• In February 2020, grieving parents discovered that a photo of their son, who had died from cancer, was being used on an alleged fraudulent GoFundMe campaign.

So, how can you donate to others in need, but also protect yourself from crowdfunding fraud?

1. Support campaigns from people you know. One of the safer ways to donate to crowdfunding campaigns for medical services is to choose ones created by a person you know in real life, or at least a friend of a friend. Even if a GoFundMe campaign tells a heart-wrenching story about a child in need, you can’t trust everything you read on the Internet — especially when it’s a stranger asking for money.
2. Check the comments. The crowdfunding campaign may be more trustworthy if there are many visible comments from family and friends. A lack of comments can be a warning sign that the campaign is not legitimate. 
3. Do your research. It’s a good rule of thumb to do your research before you spend your money (on anything). Go through the campaign page and see who is organizing it. The page should clearly state how the organizer knows the fund recipient. Unclear relationships to the recipient can be a red flag. You can additionally do a quick reverse image search on Google, to see if the photo comes from a legitimate source or if it was stolen for a fraudulent campaign.
4. Alternative donation options: If you’re uncomfortable donating to a campaign when you don’t know exactly how the money will be used, there are other options to help those in need with their medical expenses. There are companies like Denefits that create payment plans with doctors, for patients who otherwise may not be able to afford much-needed medical care. Denefits has a Social Healthcare Payments program that allows people to donate directly to patients’ medical treatment payment plans.

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Do you offer simple, fast, and reliable digital interaction to your consumers?

Is it possible to convert every customer into a collection opportunity? The answer to this question lies in the financing system used for collecting payments. The need to offer such options occurs due to the evolving mindset of consumers. Nowadays, consumers expect their financial experience including the healthcare sector, to be supported by digital payment solutions.

Adapting to a holistic payment approach is believed to improve the revenue of service providers. Both new and old businesses across the United States are investing to simplify their collection processes with digital financing tools designed for service providers. 

With the help of electronic data and connectivity, payments can be accepted from anywhere and by any mode. It not only streamlines financial data but also eliminates the need for unnecessary paperwork while ensuring that the client’s financial details remain accessible with minimal labor.

Consumers expect full flexibility and convenience when it comes to payment options. Hence, an automated payment solution (APS) is a must for any business. If applied intelligently, APS can become the best way to increase the collection amount for your business. 

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APS equals streamlined workflow

“With Denefits, all businesses can conveniently bill any consumer and schedule recurring payments via affordable monthly payment plan options tailored to meet their needs.”

In any business, it is essential to maintain equilibrium between the earnings and resources required to manage the finances. The availability of a suitable APS is convenient, both for consumers and staff. When working via APS, you need to spend a little extra time in enrolling consumers and from there onwards, the billing process gets automatically streamlined. 

Such pre-authorized contracts bring a great deal of automation in the business’ workflow. In simple words, with APS, billing becomes simple, collections become more certain, and revenue increases, automatically. Additionally, by using APS, manpower required for administrative tasks like printing billing statements and mailing efforts gets significantly reduced.   

APS – A rising demand of consumers

Market Research Conducted with both Consumers & Providers

The above graph explains the portion of consumers and service providers who expressed a need for APS and associated fundamentals. 

Initially, many service providers were reluctant to opt for APS. However, recent studies and surveys have indicated a rising demand for these options. The above chart is compiled from the data obtained by multiple studies conducted with different service providers across the States. Surveys made it obvious that consumers are showing a high interest in the APS that has the extended features of payment plan options.    

Key advantages of APS

• It can potentially help grow revenue.
• It cuts down the administrative costs.
• It can improve the business’s efficiency.
• It accelerates and automates payment postings.
• It can manage a far higher number of consumers.
• It increases the bandwidth of revenue cycle accuracy.
• It increases the accuracy of your financial management system.
• Digital archiving and quick access to real-time consumers’ data.

How APS is linked to consumer satisfaction?

“Opting for an APS, that is designed to deliver patient-centered financial experience can add positively to consumer satisfaction.”

Educated and aware consumers are getting more selective about service providers. A major portion of the consumer’s experience is overwhelmingly dictated by flexible payment options. Therefore, it becomes crucial for service providers to deliver a satisfying experience to their consumers and investing in the implementation of flexible APS. 

This culture is set forth by mobile phones and online technologies. A real-time payment system is always anticipated that enables consumers to make payments wherever they are, at any time. Along with that, consumers seek flexible settlement periods, regular notifications, and consolidated details of their payment transactions. 

APS building trust between consumer and service providers

Every technology has its advantages and shortcomings. While consumers show concerns about the security of their financial data, they also desire to understand the distribution of service costs. In short, transparency is to be maintained at every step of financial transactions. 

An APS can deliver flexible online and phone-based payment options to suit individual needs. It also facilitates the consumer’s interaction with the business. Such transparency and convenience can dictate consumer choice and it can also become a core reason for consumers to keep coming back. This is how an APS helps to build a long-term and trusted relationship while enhancing client retention and loyalty.

Summary

Most business owners would agree that traditional approaches for finance management are time-consuming and expensive. With the use of APS, finance management costs can be significantly lowered. The tedious manual process also suffers from a predisposition for human errors. Altogether, a traditional approach leads to a delay in revenue generation. 

To conclude, it can be said that APS eliminates time-consuming manual data entries, unifies all kinds of consumer data (digital archiving), reduces employee workload (labor cost), and increases business efficiency. Not only is automation beneficial to consumers and service providers, but it is also becoming increasingly important. 

At first, the automated payment solutions were limited only to larger business setups. But thanks to advancements in information technology, financial automation is rapidly becoming the norm for all types of businesses. 

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