Third-Party Healthcare Factoring
A Guide to medical factoring and third-party payees in healthcare
Table of contents
- Third-Party Healthcare Factoring
- Is Healthcare A/R Factoring right for your medical service business?
- What Financing challenges are faced by the Medical Industry?
- Are any of these Medical Cash Flow challenges familiar to you?
- How can medical invoice factoring help you overcome these challenges?
- Here is a set of frequently asked questions about our healthcare factoring program.
- What is the cost of selling my medical receivables?
- How soon will I get the medical factoring proceeds?
- Do I have to sell all my medical invoices?
- What is batch invoice funding?
- How much is the medical factoring advance I will receive?
- What happens when customers’ payment exceeds the invoice value?
- What are medical invoice factoring benefits?
- The benefits of medical A/R factoring are:
- Ready for the owner-employees of Bankers Factoring to fund your entrepreneurial dreams? Call 866-598-4295 or go to Bankers-Factoring-Application.
Is Healthcare A/R Factoring right for your medical service business?
All businesses that sell on terms have cash flow problems. At Bankers Factoring, we understand healthcare providers’ acute working capital problems because third-party payers extended 90-to-180-day payment terms.
Read more in our article What is Medical Factoring?
As a healthcare provider, you are susceptible to lacking critical working capital and enduring immense financial challenges due to outstanding account receivables from slow-to-pay customers, insurers, and government bodies.
Fortunately, an external funding solution can solve these issues for you. Healthcare factoring is a modern financing solution that you can use to manage your cash flow optimally and eliminate these severe financial shortages that limit your growth and success. So, let us get through the different challenges faced by the medical industry and how invoice factoring can help you overcome them.
What Financing challenges are faced by the Medical Industry?
The healthcare industry includes all companies and individuals offering healthcare services, equipment, or supplies. The main and common challenge they all faced is the lack of enough working capital to cover their daily activities and invest in their growth due to their typical dependence on insurance companies and government agencies delayed payments.
Are any of these Medical Cash Flow challenges familiar to you?
- Doctors, group practices, and urgent care clinics: Struggling to keep up with the overheads for your office operations? Are you lacking working capital to cover salaries and pay suppliers?
- Nursing homes: Too many expenses to maintain your staffing level? Finding it hard to keep up with the continuous operating costs?
- Diagnostic and imaging centers: Having difficulties managing both your overhead and operating expenses and the dramatic monthly lease cost of your diagnostic equipment i.e., X-ray, MRI, CT scans?
- Physical therapy and rehabilitation centers: Cash flow issues due to payments for equipment, suppliers, facilities, and operating costs?
- Home healthcare agencies: Lacking a continuous source of cash to cover your weekly payroll costs for the nurses and care aids working for you?
- Companies providing home medical equipment: Missing out on equipment sale or rent because you cannot acquire new equipment because of cash shortage due to delayed payments?
As a health care provider, not only are you challenged by the numerous operating expenses and working capital requirements, but also constant changes in technology and different capital allocations’ demands, including:
Capital Needs for Healthcare Professionals Include:
- Government-mandated electronic medical records
- Modernization and expansion of facilities
- Staff training
- Regulatory policies changes requiring capital expenditure
- Need for continuous equipment updates or replacement to meet new standards
All these challenges vary from cash shortages to a need to keep up with the new technologies, making it vital for you, as a care health provider, to have a continuous, dependable, and cost-effective source of finance.
How can medical invoice factoring help you overcome these challenges?
Accounts receivable financing, also known as factoring or invoice factoring, is a branch of debtor finance that grants you funding based on your outstanding account receivables. It will offer your healthcare practice or institution a rapid cash infusion against your creditworthy invoices.
Traditional lenders will only provide you with a loan if you can provide substantial collateral; factoring companies buy your creditworthy invoices and give you an instant influx of cash without the burden of the extra monthly debt payment.
Your approval can take as little as 24 hours, and you will receive an upfront payment, up to 90%, based on the value of the invoices you have decided to factor. After 60, 90, or 120 days, your factoring company will collect the debt from your customers per the initial terms of the invoices and send you the remaining balance minus the receivables financing service fees.
Through factoring, your healthcare provider business will receive money continuously with no strings attached. You can use that money to cover your daily operations, upgrade technology, take advantage of growth and expansion opportunities, or other business purposes.
Here is a set of frequently asked questions about our healthcare factoring program.
What is the cost of selling my medical receivables?
The cost is typically based on the value of your creditworthy invoices and the time elapsed from the funding date to the invoices’ payment date. 1-3% per 30 days is the typical pricing based on volume and dilution.
How soon will I get the medical factoring proceeds?
Establishing an account usually takes 1 to 7 days for a medical factoring transaction. Once approved, funding can take as little as 24 hours for your submitted creditworthy invoices.
Do I have to sell all my medical invoices?
No, you can sell as many or as few account receivables as you would like.
What is batch invoice funding?
Instead of submitting each invoice separately, it is preferred to submit the invoices you chose to factor in a batch format for payment approval.
How much is the medical factoring advance I will receive?
An advance can be up to 90% of your approved creditworthy account receivables.
What happens when customers’ payment exceeds the invoice value?
When we receive payment from your customer, any extras that exceed the amount advanced plus fees will be refunded to you.
What are medical invoice factoring benefits?
Invoice factoring/AR financing allows your healthcare provider business to face all financial challenges and cash inflow management issues. It will also allow you to take advantage of growth and expansion opportunities.
You can meet your overheads and operating expenses through invoice factoring, prevent cash shortages, and ensure your healthcare business’s survival and growth.
The benefits of medical A/R factoring are:
- Up to 90% upfront payment
- Special programs for Nurse Staffing Payroll Financing
- Same day funding
- Leverage your accounts receivable
- Fast access to cash and continuous working capital
- Flexible, negotiable terms
- Reasonable service fees
- Professional receivable management and industry experience
- Based on your client’s creditworthiness
- Factoring is not a loan-less debt on your balance sheet.
- Funding grows as your receivables grow
- You select what invoices you want to be factored
Ready to factor in your third-party medical invoices? Bankers Factoring medical invoice factoring program is available to any healthcare business. Healthcare business with net monthly receivables from $100,000 to $10,000,000 payable in up to 120 days by any one of the following:
- Insurance companies
- State workers’ compensation insurance companies
- Managed care agencies
- Medicare or Medicaid
- State and local government contracts
- Nursing Homes & Assisted Living Facilities