Sell Medical Accounts Receivable
Payroll is due, vendors are sending you bills, your office rent is late, you need to come up with a substantial amount of cash, and now, but you are waiting, and waiting, and waiting, for third-party payers to furnish you with the income that enables you need to meet these obligations.
It’s a problem endemic to medical practices, and one that has forced an ever-increasing number of them to turn to a strategy of accounts receivable financing. There are plenty of banks and other lenders all over the country and the internet who are willing to take your accounts receivable in exchange for a quick cash payment up front that might enable you to pay off your debts, buy equipment or otherwise invest in your practice. Some even might tell you that it will provide asset protection in a liability case.
Often, practices that take out loans or lines of credit against their accounts receivable might be paying a higher interest rate than in other types of lending. If you sell your medical accounts receivables there is no loan obligation or high interests rates to pay. You can get cash to help cover payroll, upgrade equipment, pay down debt, or use the money however you see fit. Factoring your medical accounts receivables can get you cash to cover your expenses today, but what about tomorrow when you have to start making loan payments. Selling your medical accounts receivables enables you to clear your aging medical accounts receivables without the problems of a loan.
In any practice, accounts receivable collection has inherent costs associated with processing. There are many line items, but the major ones are: electronic statements or paper statements, electronic claims (or in rare cases manual insurance claims), postage, labor, phone calls, secondary insurance submission, and communication time with patients or account holders. Most studies show this internal collection cycle costs anywhere from 5% to 12%. This is a reasonable range. Some studies purport a cost of 15%, but too many fixed overhead costs are added to the equation. If an average of 9% is used for processing and a national average of an uncollectible debt percentage of 3% is used, the argument can be made that the seller or the buyer will spend approximately 10% to collect A/R. If a convenience fee of 5% is added (because it makes each of the post-transition management tasks less complicated), the total value of the A/R might be 83% of total accounts receivable on the day of closing.
Medcare Solutions can help. Call 877-909-3111 Today!