Medical factoring allows FQHCs to work with a medical factoring company that will purchase the facility’s invoices at a discounted rate (usually 1% to 5%). This rate is applied to the total amount of invoices that a facility wishes to sell to its factor.
So, for example, if the Golden Health Center
, was to sell $50,000 worth of invoices at a discount rate of 2%, then this means that the factor will purchase the invoices for $49,000.
A factoring advance rate is then applied, typically between 75% and 95%. As the term suggests, this is simply the percentage of the purchase amount Golden Health Center will receive upon selling its invoices.
If the FQHC agrees to an advance rate of 85%, for example, it will immediately receive the amount of $41,650 (or 85% of $49,000) within 28 to 48 hours via wire transfer. The remaining 15% will still be issued to it, but only after the factor has collected payments from the FQHC’s payors.
Are you an FQHC in need of a financial services partner to keep your operations afloat? Get in touch with us at Factoring Express
, a leading medical factoring company
that has helped countless practices and businesses with unpaid invoices.