If you are a physician or medical facility manager and your practice is facing a cash flow problem, you may want to consider medical factoring as a solution. Unlike specialized loans, factoring does not come with high interest fees or monthly payments. Instead, it can increase revenue by paying out an advance on slow-paying medical claims and provide your practice with a predictable and healthy cash flow. If you are new to this method of financing, you might be interested to learn how it can stabilize your practice’s revenue and help it grow.
Private insurance, Medicaid and Medicare claims can sometimes take 120 days or more to clear. In the meantime, you must still pay the monthly rent on office space, pay your employees and buy medical supplies to provide your patients with the best of care. This can cause serious cash flow problems that may affect everyone in the office, but medical factoring can prevent these issues by providing you with steady revenue while it helps you avoid further debt. When you sell your claims to a factoring company, you will see an immediate return of up to 80 percent of each claim, with the other 20 percent returned upon completion of the claim, minus a financing fee. The more claims you sell, the faster your revenue builds with no delays, and this will open up your cash flow until your practice is running smoothly.
If you are currently running your practice’s finances on a month-to-month basis, medical factoring can help you increase cash flow and even help you build a cash reserve that will allow you to pay for unexpected expenses, such as medical equipment repair or if your medical billing software needs updating. This type of financing increases cash flow because the revenue you earn back for each claim is only subject to a single financing fee. As such, you will avoid the financial burden of high interest rates and use the additional cash as a buffer to relieve the burden of having to find money elsewhere when sudden expenses arise.
Using medical factoring allows you to increase your cash flow in short amount of time because unlike specialized doctors’ loans, applying for factoring is a simple process and the qualifying terms are not as demanding. As a result, your cash flow has the opportunity to improve and stabilize, giving you peace of mind so that you can focus on the health and well-being of your patients, not your revenue.