You delivered the work. You’ve earned the money. But you can’t access it yet because your payer won’t pay for 30, 60, or even 90 days. Meanwhile, your staff needs payroll today. Your suppliers need payment today.
Medical invoice financing solves this by converting those unpaid invoices into immediate cash. A factoring company gives you 85-95% of your invoice value right now, usually within 24-48 hours. They collect the full payment from your payer later, keep a small fee, and send you the remainder.
Remember that this is not a loan. You’re not adding debt. You’re selling an asset you already own for the cash you need today.
How Healthcare Factoring Works
You submit invoices to a factoring company, bills you’ve already sent to insurance companies or hospitals. They review them in 1-3 days and assess whether your payer is creditworthy. If a major insurance company or Medicare owes you money, approval happens fast. The factoring company isn’t judging you; they’re assessing whether the company owing you money is reliable and will pay.
Once approved, the company transfers 85-95% into your account within 24-48 hours. You can pay payroll on Friday. You can order supplies on Monday. Then the factoring company collects from your payer over 30-90 days. When paid, they deduct their fee (typically 1-5% monthly) and send you the remainder.
This works because your payers are predictable. Insurance companies and government programs always pay eventually. The factoring company knows this, so they advance cash immediately—they’re managing a timing problem, not taking a risk. This is why factoring is fast. A bank would need weeks to evaluate your credit. A factoring company only evaluates your payer.
Why Medical Providers Use Invoice Factoring
Medical staffing agencies place nurses with hospitals and pay the staff immediately. But hospitals don’t reimburse for 60 days. Payroll is due Friday. This is the core problem factoring solves.
Without factoring, you’d carry debt through lines of credit or miss payroll. With factoring, cash flows smoothly. You’re not waiting for insurance or government checks. Growth becomes possible, too; you can expand locations because you have working capital based on your invoices, not your credit score. Your staff also stops spending hours chasing insurance payments. The factoring company handles collections and disputes.
Industries That Benefit from Healthcare Factoring
All healthcare businesses that bill insurance, hospitals, or government programs with 30-90 day payment cycles benefit from factoring. Medical staffing agencies are the heaviest users; they pay staff immediately but collect weeks later.
Dental practices, on the other hand, use it for insurance receivables, taking 30-60 days. Home health agencies depend on it because Medicare/Medicaid reimburse 60+ days out. Ambulance services face slow government contracts. Laboratories bill insurance for tests but wait weeks for payment.
Physical therapy clinics, behavioral health practices, mental health agencies, and any business invoicing insurance or government programs face the same problem: immediate expenses, delayed revenue.
Factoring companies specialize in healthcare because they understand this reimbursement cycle is universal across the industry. Whether you’re a small dental practice or a large staffing agency, the timing gap between service delivery and payment creates the same working capital challenge that factoring solves.
Medical Factoring vs. Traditional Bank Loans
Bank loans take 2-6 weeks to approve and require strong credit. Factoring takes 1-3 days and doesn’t care about your credit score. Why? Because banks evaluate your entire business. Factoring companies evaluate whether your payer will pay. It’s a different assessment.
Bank loans add debt to your balance sheet. You borrow money, add it as a liability, and pay interest for years. Factoring doesn’t work because you’re selling an invoice (an asset), not borrowing. This matters for your financial statements.
It’s Friday afternoon. You need payroll on Monday morning. A bank loan won’t help as approval takes weeks. Factoring gets you funded in 24-48 hours. Conversely, if you need $50,000 to renovate your clinic, factoring isn’t ideal. A bank loan makes sense. Many practices use both: factoring for monthly working capital, and bank loans occasionally for major purchases.
The key difference: Factoring is fast because approval depends on one fact: will your payer pay? Banks are slow because they evaluate your credit profile, debt history, and collateral. For immediate cash flow needs, factoring wins. For long-term capital needs, loans win.
How to Qualify for Healthcare Factoring
- You need to bill creditworthy payers, insurance companies, Medicare, Medicaid, and large hospital systems. The factoring company isn’t evaluating you. They’re evaluating whether the company owing you money is reliable. If it is, you likely qualify.
- Your invoices need 30-90 day payment terms. If you expect payment within 10 days, factoring doesn’t make financial sense. You need a consistent monthly invoice volume of at least $10,000. You need documentation proving invoices were delivered to your payer. You need a valid business registration.
- The application takes 10-15 minutes online. Approval comes within 1-3 business days. If you meet these basic criteria, you qualify. The process is free, and even if something is marginal, it’s worth applying because factoring companies have flexibility. Unlike bank loans that reject you based on credit scores, factoring companies focus on payer reliability, which gives you better odds of approval.
The Cost of Medical Receivables Financing
The factoring company handles collection responsibilities, manages disputes, and manages all administrative work. That service costs 1-5% per month. Invoice volume affects pricing; companies factoring $200,000 monthly pay lower rates than companies factoring $50,000 because per-invoice costs are lower. Payer type matters; invoices from major insurance or government programs have lower rates because they’re reliable and require less administrative attention.
You have $100,000 in invoices from a major insurer. The factoring company charges 2%. You receive $98,000 upfront. When the insurer pays 45 days later, the company deducts its $2,000 fee from the payment. Total cost: 2%.
Compare this to alternatives. A line of credit costs 8-12% annually in interest, plus monthly minimum payments, plus debt on your balance sheet. Bank loans carry interest, fees, and debt. Factoring often costs less when you account for speed, simplicity, and lack of added debt. Reputable companies disclose rates upfront. No hidden fees. You know your cost before you commit.
Frequently Asked Questions
- What is healthcare factoring?
Converting invoices into immediate cash. You get 85-95% upfront in 24-48 hours. The factoring company collects from your payer and sends you the remainder minus their fee. No debt is added.
- How quickly can medical providers get funded?
Approval in Factoring Express takes 1-2 business days. Funding happens in 24-48 hours. Bank loans take 2-6 weeks, so factoring is dramatically faster for immediate cash needs.
- Does healthcare factoring affect patient relationships?
No. Patients don’t know you’re using it. The factoring company manages communications with insurers, not patients. Your billing process looks identical to patients.
- Is healthcare factoring available to small clinics or startups?
Yes. Factoring doesn’t require perfect credit or years of business history. If you bill creditworthy payers with 30-90 day terms, you likely qualify. This is very different from bank loans.
- What’s the difference between medical receivables financing and loans?
Factoring converts assets (invoices) into cash without adding debt. Loans add debt, take weeks to approve, require strong credit, and require collateral. Factoring is faster and doesn’t add debt to your books.
Why Choose Factoring Express for Healthcare Factoring
We specialize in healthcare, not general business factoring. We understand medical staffing, dental practices, home health, ambulances, and laboratories in every healthcare niche. We know insurance moves on its schedule. Government programs follow their timelines. We’ve seen this a thousand times.
Rates are transparent. You know the exact cost before you commit. No hidden fees. Funding is fast, like in 24-48 hours for most clients. Contracts are flexible with no long-term lock-in. Collections management is included. Your staff stops chasing insurance payments. You focus on patient care.
Healthcare providers using [Your Company Name] maintain consistent payroll, avoid debt accumulation, manage growth without traditional loans, and reduce payment collection stress. Stop waiting 60-90 days for insurance money.
