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Systems for billing and payments in healthcare are notoriously slow and ponderous. Waiting long periods of time for funds they are owed can negatively impact the cash flows of businesses. Many healthcare companies handle this difficulty through medical factoring. Here are some details on how this method of financing can assist your business.

What Medical Factoring Is

Medical factoring involves the sale of your unpaid accounts receivable to a financing company. Instead of waiting for 30 to 120 days or more to receive payments, you can obtain the funds you need to run your business almost instantly. This works well for providers such as physicians and dentists that offer healthcare services, and also for vendors that sell equipment or provide transportation or staffing services.

The Process of Medical Factoring

After you have delivered invoices to your patients or customers, apply to a medical factoring company, which will review your business, your invoices, and your patients or clients. Once you have agreed upon and signed a contract, the factor advances 80 to 90 percent of the value of the unpaid accounts receivable. Your patients or clients pay the factor, which sends the balance of payments on to you after deducting its fee.

The Benefits of Medical Factoring

Medical factoring helps healthcare companies keep their cash flow strong. This is imperative so that funds are available for rent, utilities, salaries of employees, supplies, insurance, marketing, and other needs. Healthcare companies also need cash on hand for situations unique to the industry such as equipment upgrades, changes in government regulations, and the possibility of malpractice lawsuits. You may also face general emergencies such as economic downturns and new businesses that compete with you for patients or customers. To handle these various requirements, you need readily available cash. Compared to traditional loans, financing through medical factoring is relatively easy and quick to obtain.

For more advice on using medical factoring to help finance your healthcare business, get in touch with Ideal Financial Group.