There are few bigger pains for healthcare industry professionals
than having to wait 30, 60 or even 120 days to collect payments
from insurance companies, HMOs and Medicare/Medicaid. The
healthcare industry is riddled with complex billing, coding and
processing rules that create very long payment cycles. This can
be very difficult for medical offices, testing and diagnostic
centers, medical supply companies, or any healthcare related
business, for that matter. There are always many ongoing
expenses that can't wait. There is rent that needs to be paid,
offices expenses that need to be covered, and payroll that must
be met.
This situation creates a problem for most healthcare businesses.
On paper, the business may look very profitable and seem to be
doing well. But in reality, most of the money is tied up in slow
paying invoices (also known as accounts receivable) with little
cash to show for it in the bank.
When faced with tight cash flow, most healthcare professionals
turn to their bankers. Medical doctors can usually qualify for
signature loans or lines of credit. Other business professionals
are not so lucky. In reality, a loan or line of credit may help
you in the short term, but will not solve the main problem. Why?
Well, loans are good for buying equipment or large capital
expenditures, but not for covering recurring and ongoing
expenses. A line of credit is a better solution, but they
usually have fixed limits. What happens if the business grows
past the limits of the line of credit? Many healthcare
professionals usually find out, the hard way, that the bankers
that were quite happy to extend the first loan or line of credit
will not be so helpful at increasing it. Unfortunately, bankers
absolutely hate it when businesses came back to the well for
more money.
If you look at the problem at hand, you will soon realize that
the perfect solution should have the following characteristics.
First, it should be able to accelerate your insurance payments
so that you can get them quickly rather than slowly. Second, the
solution should be able to grow with your business. So, if your
business grows its billings, the solution should be able to
adapt the financing it delivers, seamlessly. Third, the solution
should allow you to finance significant growth. Maybe three to
five times your current revenues - or more.
There is a solution that meets these criteria and is available
to the healthcare industry. The solution is to factor
your medical receivables using a financing tool called medica
l factoring. Medical factoring allows you to accelerate your
payments from insurance companies, HMO's or Medicare/Medicaid.
It enables you to receive a substantial amount of your net
collectables within days of billing, streamlining your cash flow
dramatically.
Medica
l factoring, a specialty form of general factoring, allows
you to sell your claims and receivables to a factoring financing
company. The factoring company buys them - at a small discount -
and pays you with immediate funds. The factoring company waits to
be paid while you get to use the funds to meet business
expenses. As opposed to traditional banking financial products,
medical factoring has no arbitrary limits. You can factor or
sell as much revenue as you can generate, making it the ideal
financing tool for growth.
However, factoring is not the best solution for every situation.
It works best in instances where your main challenge is that you
cannot afford to wait to get paid in 60 to 120 days. It helps
you meet ongoing and recurring expenses such as rent, payroll
and lease payments. Medical factoring is an ideal solution for
medical offices, rehabilitation centers, medical testing and
diagnostic centers, medical supply companies and small to mid
sized hospitals.
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Can Medical Factoring Help Boost You Healthcare Business Finances?
