While there are hundreds of corporate matters that business owners have to deal with, there is one that cannot be ignored. Organizing and efficiently managing finances is critical for business stability and growth. A business that has adequately organized and maintained finances can take better and well-informed decisions. These setups have a higher chance of succeeding, and they even enjoy a competitive advantage over their competitors. When it comes to the efficient management of finances, maintaining healthy cash flow, and working capital are crucial for every business. These are two essentials that pave the way for sustainable growth for a business.
Things are a bit different when healthcare facilities and medical institutes are in question. These businesses experience cash-flow problems frequently due to a high number of slow payments. Most of the patients are covered by medical insurance. It requires health care facilities to wait for a long time before getting paid for their services. Third-party payments create significant challenges for healthcare facilities to keep their operations running. It becomes difficult for such businesses to maintain a working capital or improve their cash flow. It is where medical receivables factoring comes in the picture. It is a perfect way to keep a healthcare facility running even when the number of slow payments is high. Healthcare facilities can better manage their operations while expanding their business without worrying about the day-to-day operations coming to a halt.
Medical Receivables Factoring – Fast and Easy Access to Funds
Many medical facilities are shut down due to a lack of funding when the cases of slow payments increase. In this case, there is a form of financing that can save these institutes and businesses from shutting down, and that is through medical receivables factoring. It is a funding strategy that eliminates all the problems arising due to slow payments. Many businesses choose traditional business loans to keep their facility running, but these loans can take up to 90 days to be processed. When companies are in need of immediate financial assistance, factoring of medical receivables can help. The best thing about this non-repayable type of funding is that it is free of interest.
A business owner simply has to pay a factoring company’s fee, and then they can use the money received in any way they see fit. Factoring company or firm is the entity that offers a medical provider an amount based on the invoices submitted. It can save facilities from going under and even help them grow and prosper.
The working of this financing method is simple. The process starts when the medical facility owner forwards the bill to Medicaid, Medicare, insurance companies, or any other third-party payer. The copy of the invoices is then sent to the factoring firm which purchases these invoices. After the purchase, it provides the medical facility with an amount equal to 80% to 90% of the expected net collectible value. The amount is transferred to the bank account of the medical service provider within 24 hours of invoice submission. If there are any delays, the processing time may extend to 72 hours, but it does not exceed it.
The remaining 10% to 20% of the total value that the factoring company holds back is the buffer or reserve amount. It is to balance the amount if any of the bills provided by the medical service provider do not get paid. It happens when the claims are denied, or they are billed incorrectly. Once all the bills are cleared, the factoring firm returns the reserve amount after subtracting the company’s service fee.
Expansion of Medical Facilities
Managing third-party payments is a daunting task, but after forwarding the invoices to the factoring company, things get easy. It is the factoring firm that contacts third-party payers and insurance companies which takes away half the stress of slow payments. One of the greatest benefits of medical receivables factoring is that medical facilities can transform their businesses without worrying about delayed payments. While some businesses can improve their working capital, some choose to expend their facilities with the money they receive. It is one of the fastest ways to get things done in a medical facility.
For easy and fast funding solutions, Capital for Business is the smartest choice. Whether it’s a startup, small business, or a high-end medical facility, they offer the best funding solutions to every business. Whether its small business loans, emergency financing, business line of credit, or medical invoice factoring the company provides a dynamic range of financing solutions that ensure that a business keeps operating without coming across any obstacles!