BICOCOBILLING & COLLECTION COMPANY ( BICOCO )

A Billing & Collection Company ( BICOCO or "Bee-Koh-Koh" ) is a company that is inserted between a business and its customers to facilitate the billing and collection of accounts receivables. The company is used to lawfully divert profits from the business. The goal is to keep the business from accumulating profits that would be available to creditors of the business.

The BICOCO can also be structured with other planning such that the diverted profits are moved outside of the business owner's estate.

The BICOCO is a much preferred alternative to so-called Accounts Receivable Financing Programs a/k/a Leveraged Compensation Arrangements, since there is no interest cost, nor is the client forced into purchasing an annuity as collateral. And unlike Accounts Receivable Financing Programs, the BICOCO does work to provide substantial asset protection and wealth accumulation advantages.

The BICOCO Advantages Compared to A/R Financing Programs
  • Accounts receivable are protected from creditors
  • Protection is highly uncertain
  • Future receivables are also protected
  • Protects existing A/Rs only -- no protection for future receivables after creditor executes on existing A/Rs and forces foreclosure
  • No loan / Credit unaffected
  • Program requires loan of significant percentage of value of A/Rs. Substantial credit must be used to obtain the loan that will purchase the annuity product
  • No payments required / No effect on liquidity, and wealth built up in the BICOCO may be used to solve short- or long-term liquidity needs
  • Monthly payments required whether business has liquidity to make payments or not, and liquidity is reduced by amount of loan payments
  • No third-party can discontinue the arrangement
  • Bank can call loan on A/R financing program at any time, thus causing the program to terminate and exposing assets
  • Not a fraudulent transfer
  • Usually a fraudulent transfer
  • Significant potential estate tax advantages
  • Value of plan trapped in owner's estate
  • Not a tax shelter
  • Where business is deducting the interest paid on the loan, this is possibly a tax shelter
  • No requirement to purchase any life insurance or annuity product
  • Purchase of annuity or life insurance product absolutely required to provide loan collateral
  • Easy to unwind
  • Difficult to unwind / promoters usually charge significant fees upon termination

It is these reasons why the BICOCO has become the preferred choice among sophisticated clients and advisors to the deeply-flawed A/R financing programs.

The BICOCO is available to new and existing clients of our firm. Please contact us for more information.

    

 

 

 

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