Many physicians need working capital for any number of reasons. When the necessity to purchase new equipment arises, or the need to cover operating expenses like payroll and rent become difficult due to cash shortages, physicians will entertain the options regarding financing that are at their disposal. The following is a list of common mistakes that physicians will make when addressing these issues.
1. Not considering your physician financing options. When physicians need financing, the first place that they will generally turn to is their local bank, even though there are other options out there that would prove to be far more beneficial than a bank loan. Traditional loans from financial institutions are complicated to process and time consuming. Typically a bank loan is going to require collateral of physical assets that are necessary to run your practice. You are borrowing money to get to the next level of growth, or to bridge a temporary gap in free cash, and as collateral you are risking your equipment or personal assets that you need in order to stay open. The risks that are associated with these types of physician financing can easily outweigh the benefits, as an inability to pay back the loan on time could result in the seizing of the equipment that is necessary for you to practice, and therefore closing your practice forever. Non-traditional physician financing options like those offered through Med-Care Solutions do not require you to risk your physical equipment as collateral, and instead offer the option to purchase your accounts receivable, using your aging accounts as the method of acquiring cash. These accounts are not required to be repaid if they are not collected, therefore posing no risk to your practice.
2. Bringing on more debt. If you are having trouble paying the current expenses, or have taken on debt in the past that is still not repaid, the financial struggle is already bad enough. While taking out another loan may provide a short term answer to keeping the lights on, it will actually make matters worse in the future because now you will owe even more than before. Without some sort of plan in place that will dramatically raise the amount of money taken in every month in the form of more patients, then the bringing on of more debt is not going to solve your problem. All it will do is keep your doors open for a little longer. Physician financing options like accounts receivable purchases not only solves the short term cash needs that your practice has, but also can be used as that method of increasing revenues by increasing your patient load. By removing the risks of default and lengthy collections on debts owed to you, and putting into place a system that will guarantee monthly payments to you for the work that you provide, you have the ability to predict your bottom line more accurately and therefore consider patients that you might have previously considered too risky to take on due to their association with a personal injury case or workers comp. Through Med-Care Solutions partnerships, you can focus on treating patients who need your services, instead of collecting the fees they owe you. Med-Care Solutions pays you directly, which frees up your staff to concentrate on patient care.
3. Interest on loans. When you are short on cash to cover expenses, the last thing you need is to owe extra money next month that you already don’t have. Interest on loans is the way that the bank makes money, so even if you have done extensive research into which bank will give you the best loan rates, no matter what you are still going to be paying interest for the lifetime of that loan. Med-Care Solutions physician financing programs have no interest associated with them, so they do not add to your cash-flow problems next month. A traditional bank is in the business of loaning money and getting paid for it, which only benefits them, while Med-Care Solutions is in the business of creating options for you to grow your practice, which is beneficial to everyone.