How the Medical Field Can Use Accounts Receivable Financing
One of the main problems that the medical professionals face is the lack of funds to keep medical institutions functioning smoothly. Medical insurance providers contribute to the growing accounts receivables in the health industry. Consequently, it is hard to follow up on the invoices and the billing process effectively. For this reason, medical centers opt for accounts receivable financing, which is referred to as medical factoring in the medical world.
In simpler terms, medical factoring involves selling accounts receivables to the companies offering this financing option. The medical centers receive about 80% to 95% of the net collectible, and they pay a small fee, which can be about 1% to 5% of the total invoices. The lenders significantly benefit the medical industry by providing finances to run routine operations. These financing companies have customized application process that is specific to the medical field.
Most lenders release the cash within one or two days as opposed to bank loans, which could take 30 to 60 days. Also, the funding company takes the responsibility of collecting the money from the insurance providers. The lender also takes care of the billing process and presents reports to the medical institution.
The medical industry uses funds to enhance services and get good staff members. This financing option helps the health facilities to get discounts from suppliers because of regular and timely payments. Therefore, the medical industry enjoys several benefits of selling receivables.
Accounts receivable financing is different from traditional loans because the balance sheet will have a positive effect, a rare occurrence when taking conventional loans. The collateral used in this financing is the invoice, which means that medical institutions don’t need to put assets in line when applying for medical factoring. Accounts receivable financing helps medical institutions experience the benefits of fast and continuous cash flow. They can use this cash to finance the growth and expansion of medical facilities.
Another advantage is enhanced business efficiency. This is because all supplies will always be available at the institution, and the employees will be paid on time. A good number of medical industry professionals enjoy these benefits, and they include physicians, surgeons, oral surgeons, and osteopaths. Treatment centers such as rehab, nursing homes, and dialysis and surgery centers can also benefit from medical factoring. Medical laboratories and ambulance providers are also eligible for this financing option.
Medical factoring has significantly helped the medical field. It is wise for medical institutions to sell their accounts receivables to keep business running. Identify a lender who is dedicated to ensuring your medical facility is running smoothly without any financial hitches.