Medical Factoring: Taking The Delay Out Of Payments
If you are a medical entrepreneur or the manager of an accounting department in a medical organization, it’s likely that you don’t relish the prospect of having to wait around for accounts to be paid. Cash flow problems are a constant concern in the medical industry, with high overhead costs in the form of leasing, energy expenditures and especially payroll. When the money you need is tied up in insurance claims, some of which can take several months to pay out, you don’t need to turn to expensive loans to get the cash you need. Medical factoring is a practical and accessible solution to this specific cash flow problem.
Anyone who makes claims to insurance companies and then experiences lengthy waits knows the benefit of medical factoring. Liquidity and prompt resolution of receivables matter, because almost every healthcare industry business faces a cash flow crunch at one time or another. Whether you are operating an independent practice or a large organization, this unique product allows you to get the money you need to stay liquid without complicated and slow loan application processes.
What Is It?
Medical factoring is essentially a way for you to get a financed advance on the claims you have out to insurance companies. The process is simple. You submit all of the relevant paperwork to the financing organization and they give you a lump sum payment equal to a large percentage of the claim amount. You can usually expect such a large percentage because of the low risks and reliable payouts associated with insurance companies. Instead of having it a line item in your accounts receivable, you now have cash to use however you see fit. In three months, six months, twelve months or however long it takes for your insurance company to pay out your claim, the financing organization will take their fees and return the balance to you.
Select Cash Flow
Another way to use medical factoring is to improve the reliability of your cash flow. You don’t have to perform accounts receivable factoring on every single claim made. Instead, you can use this tool to normalize cash on hand and better address accounts payable issues. Predictable cash flow takes the guesswork out of many business concerns, including growth forecasting and hiring.
If you are concerned with managing expansion and scalability of financing strategies, like many health care companies in this growth environment, you can be assured that your factoring line of credit will expand alongside the claims you make. Choose the right financial organization by going with companies that focus on your specific type of business and industry. Look for evidence of professionalism and reliability, as well as competitive rates once you ask for a quote.