How To Use Medical Factoring To Fund Healthcare Facilities
Factoring companies provide a cash advance in exchange for unpaid bills. They can be helpful for many different businesses looking for an infusion of capital. To benefit from this type of financing, of course, companies need to have a significant number of customers and invoices available. The healthcare profession provides a great opportunity for medical factoring since patients and patient bills offer a steady source of potential revenue.
How To Use Medical Factoring for Smaller Clinics
Doctors with private clinics can take advantage of factoring to acquire needed equipment without going into debt. Factored invoices are a type of cash advance, not a loan, so you don’t have to worry about interest rates or missed payments. Another way this type of financing can help is when you have emergency financial needs. Taking care of payroll, taxes and rent isn’t a problem.
How To Use Factoring for Larger Healthcare Facilities
It may seem that hospitals shouldn’t have any cash flow problems, but that’s often not the case. In addition to needing to purchase equipment, hospitals also have to employ a large number of employees to keep things running smoothly. Like any business, hospitals have times of year when they’re busier and also moments of slowed income. Factoring a portion of patient bills can help generate capital when needed most without affecting annual revenue increases.
Medical factoring can also alleviate financial difficulties when something unexpected happens in the accounting department. If your hospital is going through tax problems or losses due to financial errors, a sudden infusion of capital can help restore balance.
Types of Healthcare Factoring
There are a few factoring options for healthcare providers. One popular option is to factor insurance claims. This is a great way to receive capital immediately instead of having to wait months to haggle over the details with insurance companies. Claims are used as collateral for a cash advance, delivering a large portion of the bill’s value up front and the rest upon payment by the insurer. Hospitals with a larger volume of claims can get lower finance fees per transaction. This type of financing is compatible with many different medical insurance companies, including government-funded sources such as Medicare and Medicaid.
To get the best results, it’s important to work closely with a trustworthy factoring company that is willing to tailor the process to your hospital’s specific needs. Healthcare facilities have a high volume of accounts receivables, patients and expenses, so you need a program that minimizes costs while taking advantage of this large volume.