Health Care Factoring

health care industry factoring

Financial challenges brought on by cash flow shortages have traditionally been associated with industrial or retail businesses that must commit money to raw materials or inventory, but they are forced to wait for payment of their invoices for weeks or months. Outstanding accounts receivables mean that a business must wait for slow-to-pay customers in order to maintain any measure of cash flow.

Providers in the health care industry may also be susceptible to cash flow shortages. Physicians, nursing homes, hospitals, medical equipment companies and other health care providers that depend upon payments from health insurance companies, Medicare and Medicaid can face severe cash flow challenges caused by slow paying insurers and government bodies.

Medical providers have discovered a solution to their cash flow problems through accounts receivable factoring. It is the same solution that companies in other industries have been taking advantage of for years to solve their cash shortage issues.

medical factoring

Challenges Faced by the Medical Industry

The health care industry is composed of an assortment of companies and individuals offering services, supplies and equipment. One thing they all have in common is their dependence on payments from third party insurance companies and government agencies to provide the cash flow that is vital to their operations and growth of their businesses.

Typical health care providers and the cash flow challenges confronting them include:

Besides needing funds for operating expenses and working capital requirements, providers in the health care industry are constantly challenged by changes in technology and other demands on their capital allocations, including:

These and other demands on the cash reserves of your health care company or practice makes it essential to have a reliable and cost-effective source of funds.

Traditional Financing Methods

Traditional financing methods used by companies to obtain working capital for operating expenses or expansion have been limited to debt and equity financing. Debt financing includes:

Traditional loans and asset-based loans from institutional lenders and private sources of funds, can be difficult for new companies or practices to obtain because of underwriting guidelines which established credit and lengthy business history. Loans can be expensive with additional added fees by the lender in addition to interest charges. One of the biggest drawbacks of a loan is that it is generally a one-time infusion of cash that adds another layer of debt and requires monthly payment by accounts payable from an already cash-strapped borrower.

Bonds are issued by corporations. They are debt instruments that must, eventually, be repaid with interest. As with other types of loans, an organization trying to sell bonds must show a credit and financial history satisfactory to potential buyers.

Equity financing is another method that corporations can employ to raise capital, but it comes with some inherent risks. Equity financing involves the sale of stock in the corporation. Although it brings capital into the organization, the downside is that the purchasers of the shares of stock acquire an ownership interest in the corporation.

Receivable Solutions from Factor Funding Co.

Accounts receivable financing, also known as factoring, offers a company or practice a rapid cash infusion without the burden of an additional monthly debt payment. Unlike traditional lenders that offer you a loan secured by the value of your accounts receivables, receivables factoring lets you sell your outstanding accounts receivables for an immediate influx of cash without the burden of repayment from you, rather from your debtors

Factor Funding Co. accounts receivable program is available to any health care provider with a least $100,000 in net monthly receivables payable by any one of the following:

Through factoring, the money a health care provider elects to receive on a weekly, biweekly or monthly basis will come with no strings attached. You can use it to upgrade technology, pay expenses, replenish working capital, expansion or for any business purpose.

Frequently Asked Questions about Factor Funding Co. Program

What will it cost to sell my medical receivables?
The cost is based upon the value of the receivables factored and the time elapsed from the date of funding to you and the date on which the invoice is paid and closed out.

How soon will I get the funds?
A typical transaction takes from one to seven days to establish an account. Funds are available 24-48 hours after initial approval and each time you submit additional invoices or funding requests.

Do I have to sell all of my claims?
No, you may sell as many or as few claims as you wish.

What is claim-by-claim funding?
Each time you submit a claim for payment to a third-party payer, you may submit the claim to us for verification and payment of an advance.

What is batch funding?
Instead of submitting each claim separately, you may submit the claims in a batch or bundle format for payment approval.

How much is the advance I will receive?
An advance is between 70 percent and 95 percent of the approved receivables.

What happens when payment is received from the third-party payer?
When we receive payment from the payer, any portion of the payment that exceeds the amount advanced plus fees will be refunded to you.

Find Out More about Health Care Receivables Factoring

The experts at Factor Funding Co. have developed innovative receivables factoring solutions to meet the unique financial challenges faced by health care providers. Learn more about solving your most difficult cash flow issues by calling today. You can also download our convenient receivables factoring application form.