Healthworks, Inc.

Sandra Wolfe-Korejwo, founder, president and CEO of Healthworks, Inc., built her business into a leading staffing, consulting and education provider for the health care industry, specifically focused on the diagnostic and invasive cardiovascular imaging sectors. Healthworks has developed a deep roster of distinguished customers that include hospitals, medical centers and clinics, such as the University of Pennsylvania Health System, Kaiser Permanente and some of the largest vendor-supply companies in the world, such as Philips Healthcare, Johnson & Johnson, Toshiba and Siemens.

After 12 years of consistent growth, Wolfe-Korejwo found the company in unfamiliar territory. The recession had hit the health care staffing industry hard with excessive declines in revenue – more than 40% in some cases – and the company saw its commercial line of credit reduced at a time when it needed it the most. As a result, Healthworks became another successful company pushed from growth mode into survival mode.

A reduction in business due to the economic recession and extended customer payment terms was creating significant liquidity constraints, and Healthworks had to find a way to navigate the current economic environment. The company needed to somehow improve its working capital in order to meet payroll and other expenses.

“We have a somewhat seasonal business, with a significant amount of our revenue being realized between May and August,” Wolfe-Korejwo explained. “With overall demand down due to the recession, even our best months turned out to be slower than expected. Consequently, we were even more cash-constrained than usual during those seasonal months.  Suddenly, we weren’t sure if we were going to be able to survive the recession or become its next casualty. We have maintained great relationships with our customers. However, under the current economic backlash, many customers were extending their payment terms from the normal 30 to 45 days to 60 days or longer. We simply did not have enough working capital to pay our employees on a weekly or biweekly basis. We knew there had to be a better way to maintain our cash position.”

Banks Not Lending – Where to Turn?

Unfortunately, Healthworks’ bank was unwilling to increase its line. And, as a service-based business, Healthworks was without hard assets to serve as collateral to meet increasing bank requirements. “Payroll is our biggest cash requirement – representing 80 to 85%, on average,” Wolfe-Korejwo said. “Managing our cash flow to meet our payroll needs is by far one of our greatest challenges. If we can’t find the capital we need to protect against extended payment terms, or take advantage of growth opportunities and the increased cash needs that come along with them, then we’re unable to maintain the day-to-day operational requirements or grow the business. As a staffing company, limited access to capital means not hiring – or even worse, being forced to let go of valuable employees.” 

Access to Capital When You Need It, How You Need It

After struggling to keep Healthworks’ cash flow positive, Wolfe-Korejwo found relief and dependability with The Receivables Exchange. Over the past eleven months, Healthworks has been selling select receivables of some of its best Fortune 100 and 500 customers to gain access to affordable capital and maintain a strong cash position. By participating in regular weekly auctions, the company has been able to build up its transaction history and drive down its cost of capital significantly over that time. “Our auctions sell so fast that I’m still amazed at how easy the whole process works,” Wolfe-Korejwo said. “It really is cash flow at your fingertips. And the best part is that we receive the capital the next business day, wired directly into our bank account.”

“The Receivables Exchange has helped us tremendously,” she added. “We have been using the Exchange as a critical component of our working capital optimization model. Now, we can reinvest those funds into the business and maintain our liquidity. We can take advantage of opportunities to grow our business knowing that we’ll have access to the cash when we need it. We’ve been able to maintain existing long-standing client relationships by extending their payment terms without sacrificing cash flow. With the Receivables Exchange, we can focus on delivering the best clinical and educational services our customers have come to expect from Healthworks, having eliminated the distraction of worrying about whether or not our invoices will be paid in time for us to meet our payroll obligations. Being a Seller on The Receivables Exchange, we’re able to grow the business, hire and train new employees, and look to expand into other markets as the economy slowly recovers,” she said.