Aging Medical Account Receivables
An excellent form of financing is selling their aging medical account receivables, a process known as ‘factoring’. Factoring is converting the aging medical account receivables of a business into cash by selling outstanding invoices to a ‘factor’ or funding source at a discount. Medical account receivables factoring gives the business immediate cash to manage its operations more efficiently, sustain and grow the business. Selling your medical account receivables gives you the cash to; meet payroll, take supplier discounts, purchase equipment, and increase staff.
Many businesses have not considered aging medical account receivables factoring when looking for financing, possibly because they do not understand it. However, factoring is one of the oldest methods of providing working capital to help businesses solve their cash flow needs. Cash flow problems often occur at the early stages of business development or during periods of rapid growth. Cash flow can become a problem in the healthcare industry when completed work is unpaid for 30, 60, or 90 days after issuing the invoice. This forces some businesses to try and obtain small business loans. However, conventional borrowing increases business expenses and normally requires additional collateral. Some companies especially smaller ones are turned down by banks because of loan underwriting criteria.
With medical account receivables factoring, instead of analyzing the applicant’s financial statements, the factoring company evaluates the strength of the client’s account receivables. If the business has a product or service that it provides to a creditworthy customer, then the business is a candidate for factoring. Medical a ccount receivables factoring does not create debt or require additional collateral. It is very simple to use. Cash advances from 80% of the invoiced amount, depending on the customer and volume of business, can normally be obtained in 24 hours or less–and as often as the business has outstanding invoices and needs more cash.