A Guide to Medical Factoring
Medical Factoring is a committed financial plan that helps companies within the healthcare industry to obtain financing when they are experiencing dips in capital assets.
Sometimes it can take several months for invoice remittance to be received. Therefore, Medical Factoring can be beneficial for both vendors and healthcare providers alike. Due to the nature of their average clientele base, it’s not uncommon to experience a fluctuation in cash flow. In turn, this can delay necessary funding for expenses like upgrading or maintenance for medical equipment, facility rent, and utilities, or payroll for medical staff. Not to mention other specific situations such as lawsuits, economic hardships, or healthcare reforms.
The approval process typically begins by reviewing a business’s assets and its invoices. This also includes credit checks on select past and present patients. Then, the agreement terms will be drawn up in a contract stating any applicable fees, payment conditions, and the maximum factoring credit amount. Once it has been signed, and advancement will be paid to the business. And going forward, all invoicing will be handled by the factoring institution. It is also important to note that once the client pays their invoice, the factoring institution will bill the business for any remaining reverse amounts, service fees, or rebates from the remittance.
As an alternative option to Medical Factoring, a business may also want to consider Medical Receivables Financing instead. There is still the benefit of increased cash flow with invoicing advancement. However, this process may not require credit checks, and invoices are typically not managed by the factoring company. And there are generally no unexpected costs or hidden fees included, either. The approval process is typically much shorter, as well.
Contact Diamond Capital today for more information about Medical Factoring, and find out if it’s the right financial path for your business.