Medical factoring guides the medical companies that bill private insurance companies like Medicaid and Medicare that have problems with the cash flow mainly because of delayed and slow payments. This variety of financing is usually used by medical competent and healthcare suppliers.
The lengthy hold up between when the facilities are delivered and when the payment of the bills is done can create enormous problems with the cash flow for suppliers and providers. Medical factoring deals with this problem by offering the healthcare providers with the avenue to cash immediately for invoices that are yet to be paid by Medicaid, Medicare or other independent insurance companies.
Vendors and Providers are the two types of medical companies that profit from medical factoring. Vendors are any person or company that designs, develops, sells, and/or supports goods or services such as apparatus, medical personnel, transcription of documents and paperwork services, shipping services, etc. Providers are individual or institutions that aid health care services like therapists, dentists, physicians, nursing, pharmacy, etc. Providers typically invoice third-party payers like the insurance companies. Medical factoring is excellent for both vendors and providers because these type of working field have the character of working with credibility and trustworthy, but clients that pay slowly.
7 REASONS HOW MEDICAL FACTORING CAN BENEFIT YOUR BUSINESS
Factoring has become increasingly prominent and important majorly because it helps with the problem with the financing of diagnostic centres, medical practices and other kinds of healthcare businesses. This topic helps you understand the reasons for working with medical factoring companies that are beneficial for the betterment of your cash flow and your business.
It is very common for the medical companies that are expanding and growing at an accelerated speed, medical factoring becomes extremely convenient. This means and entails that if your business continues to expand regularly or all of a sudden lacks this growth, you can modify the funding as you like.
There are many reasons and positive points as to why does medical receivable factoring becomes important and how some important medical factoring benefits can improve your business. Some top points are followed:
- The most important aspect of using the medical receivables factoring is that your cash flow dramatically enhanced and reformed. Instead of the usual 30-120 days, your medical claims would be paid in just a couple of days. For growing and small healthcare providers, this particular advantage can be very beneficial because they are usually functioning low on resources and assets.
The cash flow is predictable and certain. Claim amount is uncertain; some pay promptly while others take months to pay. This uncertainty and unpredictability often generate problems for the medical providers because they are confused about how much money will they receive in a given month. As a result, it becomes inaccurate to forecast and calculate your cash flow. Medical receivable factoring helps you with this problem and provides you with certain cash flow. You get the ultimate control over your finances because you can select which providers to finance and when to deliver claims.
- The medical receivable factoring provides you with flexibility and adjustability. It is linked to the amount of the volume of your medical claims to insurance companies. The channel can increase and accustom as your business grows. This advantage makes factoring a perfect fit for healthcare businesses and medical practices that are growing rapidly.
- Medical receivable factoring allows you to plan for growth and advancement. With predictable and certain revenues and also have improved cash flow, it allows you to plan for the growth of the business. These capacity and means is a very vital long-tern benefit of factoring. You can also expand services and assistance; can also add locations along with increasing the manpower by adding more employees. All of this is achievable by having the certainty that you will have the proper cash flow to pay for them.
One other important aspect is that it works with Medicare and Medicaid. It can be used to finance Medicaid and Medicare receivables. This example is very important for healthcare providers who assist a large patient base.
- One other great factor is that medical factoring is applicable for small and growing business both. It is available to doctors and small business owners who are new and are just starting out and do not have substantial and sufficient assets. It’s also convenient and accessible to growing healthcare businesses that are running deep on assets and resources.
- It can be set up brilliantly quickly. Medical receivables can be set up in not more than a week or two. Moreover, you have powerful control over the setup procedures and also the period of the due diligence. This is an ideal option for businesses that have low cash flow and require a prompt solution. But setting up hospitals, that are a larger facility might take more than two weeks due to expanded capacity and complexity.
Medical receivable factoring helps you with the solution to fast money. Along with being fast, it is also much easier. Banks and loan officers pester you through immense investigation and scrutiny and would turn you down on the basis of poor credit or no assurance. The medical factoring will check out the payment history and ratings of the clients. You can expect to be approved, as long as you have unpaid bills receivable.
- Once you are selected or approved, you do not have to worry about the fact that you will be restricted on how to use your money. The cash is completely yours. Many healthcare companies and businesses have used factory to pay expenses and costs like ordering supplies like bandages, gloves and test strips. To pay for receptionists, nurses, lab workers and other staff workers. To pay for insurance and utilities for the buildings, renting or purchasing modern and sophisticated equipment like telescopes and x-ray machines.
- Your factoring transaction cannot be restricted as a loan, because you sold your unsettled invoices in exchange for money. Medical factoring is in fact not a loan in any way that means that you are not taking upon any kind of new debt that the business cannot handle.