2. An Introduction To Medical Factoring
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3. An Introduction To Medical Factoring
A Typical Situation in The Health Care Industry
If you own a business in the health
care industry, then you know that
you don’t always get paid upfront.
Oftentimes, you get your money a
bit later after you’ve provided the
service or equipment your company
offers. Sometimes this means that
you get your money 45 days later,
and in other cases the delay may be
as long as 90 days. But one thing is quite clear—you don’t get your money when you really
need it – now!
If you find that this situation is already affecting your cash flow and preventing you from
growing your business, then you might want to consider medical factoring.
Do You Need Medical Factoring?
The normal delays in receiving your payments can have rather serious repercussions for
your business, especially if you don’t have a huge flow of capital and you can’t get
traditional financing. For example, you may be new in the business and find that banks are
overly hesitant to loan you the money you need at a reasonable rate (or even at all). And
even if you do have the option to get a loan from a bank, getting approval can sometimes
take too long.
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4. An Introduction To Medical Factoring
Many businesses in the health care
industry may have several valid
reasons why their money should be
obtained sooner rather than later. For
example, you may need the money
right away for payroll purposes, as
employees are not keen to wait around
for two months before they get paid.
You may also need the money to hire
new personnel or to buy the medical
equipment your business needs. Many of the marketing strategies that businesses employ
also tend to require a bit of financing.
How Factoring Works
Let’s say that you are supposed to receive exactly $1000 dollars from a particular invoice.
That’s not necessarily the amount stated on the invoice, however. If you are dealing with an
insurance company then you may not get the full amount, but the medical factor will have
the ability to compute just how much of the invoice you stand to receive.
our agreement with your factoring company may enable you to receive
80% (this percentage varies from one factoring company to another) of the
amount, which means you get $800 right away. If the bill is fully paid in two
months, and your factoring company charges 2% (this is also a variable rate
which differs from one factor to another) per month, then the factoring company
gets 4% or $1000, or $40. You then get sent the balance of $160.
Y
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5. An Introduction To Medical Factoring
There may also be a fee per invoice, which means that a single invoice that totals $100,000
will require you to pay much less to the factoring company should you instead submit a
hundred invoices that total $100,000.
Services Factoring Companies Offer to Healthcare Businesses
While factoring is becoming quite popular across the broad spectrum of the business world,
factoring companies that specialize
in the healthcare industry offer some
services that general factoring
companies cannot do as effectively.
For example, a medical factoring
company may be much more
efficient in dealing with accounts
receivable that are due from third
party insurance companies and
government insurances such as Medicare.
Other companies may also have extensive experience in dealing with clients like medical
centers, hospitals, and nursing homes. The kind of medical receivables you have will help
you determine which particular factoring company can fit your specific needs.
But advancing you the money you need for your business is just one service that a medical
factoring company can offer you. Other services include:
Ledgering – The maintenance of the accounts related to the receivables you sent to
the factoring company. Many people who enter the health care industry aren’t all that
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6. An Introduction To Medical Factoring
enthusiastic about the purely business aspects of their own company. After all, most
people who get into the healthcare business are those motivated by offering much-
needed services first. Doctors, for example, are like this, and not every one of them
who establish their own clinics are adequately trained to maintain proper records. If
you are one of these people, then your factoring company can maintain your records
for you and include all the pertinent data that should be noted.
Collecting Receivables – Again, many businesses in the health care industry often
have problems when it comes to collecting. Sometimes it would mean having to
employ additional personnel to deal with this particular issue, and in some cases
having to think about collecting receivables may distract you from your actual job of
proving an important medical service.
Again, a factoring company can do this work for you. If they have the right experience
with your usual customers, then they can collect the receivables much more efficiently,
and also make the proper collection records for your business. By outsourcing this
particular aspect of your business, you may also cut down on your operating expenses.
Protection Against Non-Paying Accounts – In regular factoring agreements, if
your customer is unable to pay an account then you are required to send the factoring
company the money they paid for the receivable. But some agreements are known as
non-recourse factoring agreements; essentially the factoring assumes the risk of non-
payment.
While there are certain situations in which you are still required to return the money—
the customer is disputing the amount they have to pay or is alleging that you did not
provide the product or service for which the receivable is for—for the most part a non-
recourse agreement protects you should the customer declare bankruptcy or becomes
unable to pay.
Improving Your Ability To Provide Healthcare Services
To wrap it up, factoring isn’t exactly a loan. It’s more like a sale of the accounts receivable.
Therefore, the factoring company isn’t overly concerned about your financial dealings and
how you will use the money you get in advance. A factoring company focuses on the
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7. An Introduction To Medical Factoring
quality of the receivables—essentially, the likelihood of getting the money from the
customer in the time stated.
This speeds up the process of getting the money for your company, and allows you access
to liquid assets much more quickly. With medical factoring, you can then improve your
ability to provide vital services in the health care industry and grow your business at a rate
that aligns with your vision.
To get an instant quote for your business, click the link below:
=> Click Here To Get An Instant Quote <=
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