If you work in the healthcare industry or run a business that provides medical services and supplies, you’re probably familiar with the intricacies of different companies’ billing requirements. Add government regulations and insurance providers’ receivables standards, and you have a recipe for invoice payment delays.
According to multiple surveys, it takes around 60 to 90 days for a claim to get paid in the medical industry.
While payment delays are unfortunately common in the industry, they can often spell the difference for a new or struggling facility looking to cover operating costs. This is why medical claim factoring can be a game-changer for medical facilities looking to access working capital to keep things running.
What is Medical Factoring?
Briefly put, medical factoring allows health-related businesses to sell their claims to a financial company, called a “factor,” that will settle their unpaid claims on behalf of the facility’s customers.
The factor, in return, will work hand in hand with your medical billing company to monitor collections. Factors typically apply a discount of 1% to 5% to the full amount—so while the healthcare facility doesn’t get 100% of their receivables, the deduction is very minimal compared to the fresh inflow of cash that can be used within 24 to 48 hours after approval.
Medical factoring is accessible to all healthcare providers that work with government insurance programs, as well as private insurers. Some examples of facilities that may be eligible for factoring include the following:
● Clinics
● Hospitals
● Medical Offices
● Dentists
● Nursing Homes
● Federally Qualified Health Centers
● Private Practices
● Medical Supply Companies
● Pharmacies
● Surgery Centers
● Mental Health Providers
● Medical Staffing Agencies
● Ambulance Providers
● MRI Clinics
● Medical Laboratories
● Physical Therapy Providers
Top 5 Benefits of Medical Factoring
Medical business owners can often run into cash flow challenges and difficulties collecting payments from insurance companies and other customers. The reality, however, is that the bills don’t stop just because you aren’t getting paid.
You still have to repair and upgrade equipment, pay your employees, and cover all related operating costs. Medical factoring has many benefits that can help medical facilities keep the lights on even amid payment delays. These include:
1. Getting Access to Instant Cash
It can be very frustrating to get your money tied up in claims. However, with the help of a factoring company, you can collect 75% to 95% of your unpaid invoices in just one to two days. This allows you to use your funds for operating expenses instead of waiting months to get paid.
2. Purchasing Better Equipment
Ensuring your medical equipment is up-to-date is critical when trying to establish your name as a top medical facility. You can use your cash from factoring to repair and upgrade equipment, as well as pay existing suppliers on time to also reduce interest rates on late payments.
3. Hiring Top Talent
Having cash on hand can also help you make better hiring decisions when adding more staff to support your operations or getting top talent on board. There’s no need to implement hiring freezes or compromise on quality when you’re assured you can get your payments on time.
4. Scaling Efficiently
Medical business owners are all too familiar with the frustration and pressure of needing to cover ongoing costs required to keep the facility running.
With enough cash on hand from medical invoice factoring, however, there’s no need to pay for expenses out of your own pocket—nor do you have to worry about running out of much-needed capital as you’re carrying out your expansion plans.
With medical factoring, facilities can bridge the gap between the costs spent to render medical services and the payments for these services.
5. Staying Debt-Free
Selling unpaid claims to a factoring company provides much-needed finances—without adding to your debt obligations. Factoring is not counted as a loan, so it comes with the added benefit of helping to build your credit. Factoring does not reflect as a liability on your balance sheet, plus you can pay vendors on time, helping you to establish a better credit rating.
Conclusion
If you own a medical facility and are looking for a way to address cash flow issues, look no further than Factoring Express! We are a leading medical factoring company with years of experience in converting invoices into cash, offering you instant cash advances in as little as 24 hours. Start a free trial now!
