Medical Receivables Factoring/Medical Accounts Receivable Financing
The healthcare industry has two types of companies that benefit from medical factoring. One provides services or sells goods to the medical industry, such as nurse staffing or medical billing services.
Then there is the other which is a provider that bills third-party medical insurance companies. Both types of businesses are ideal for invoice factoring (also known as accounts receivable financing or accounts receivable factoring).
Medical factoring helps companies that bill private insurance companies, Medicare, or Medicaid, and have cash flow problems due to slow payments.
Medical factoring is a type of financing commonly used by healthcare providers and medical professionals of all specialties.
Healthcare invoice factoring is beneficial for both vendors and providers as these types of businesses have a reputation for working with creditworthy but slow-paying customers.
These are a few benefits of medical factoring that go beyond simply balancing the cash flow of a business.
These are just a few examples of how medical factoring can benefit your healthcare company:
- Provides a simple, speedy solution without debt.
- Helps you maintain a steady, continuous, positive cash flow
- Gives you the opportunity for potential growth in your business
- Helps improve your creditworthiness
By taking advantage of medical factoring, you can save more lives, take care of more important things.
There are many different healthcare businesses that can benefit from healthcare factoring services.
Below are a few examples of these businesses:
Cancer Care Centers
Medical Staffing Agencies
Temporary Nurse Registries
Medical invoice factoring involves companies that are service-oriented businesses within the healthcare industry.
These healthcare providers work directly with hospitals or other healthcare facilities and do not bill third-party payors.
- You submit your approved claims to the factor.
- The factoring company advances up to 80% of the claim.
- The claim is paid in 30-120 days the factor rebates the remaining 20%, less medical factoring is that transaction is financed based on the net payment of the claim.
- The net payment is the amount that the insurance will actually pay for the claim. In some instances, this amount may vary from the gross invoice amount.
- A very important advantage of medical receivables factoring is that it can fix cash flow problems created by slow-paying insurance companies.
The HealthCare Company must follow all legal and proper medical billing procedures and guidelines.
Healthcare Providers within the Medical Industry should have an average monthly billings of third-party Medical Insurance Invoice Receivables ranging from a minimum of $35,000 to $500,000.
The company must be free of liens and judgments and they must not have severe tax problems.
- Once the medical practice is deemed viable, factoring can begin immediately.
- Once the factoring agreement has been signed, the factor will advance 80% to 90% of the submitted invoices’ value.
- In the majority cases, the medical company will receive the funds in 3 business days.
This will then transfer the responsibility of bill collections to the factoring company. The factoring company then will contact the clients with information on how to make payments.
- Pharmacies are often processing hundreds of claims each day, meaning they can have thousands and sometimes millions of dollars of unpaid invoices. They definitely need Medical Factoring!
- Medical invoice factoring requires working with a financial institution, called an invoice factoring company or Factor. Factoring agreements may either be recourse or non-recourse agreements.
- In a recourse agreement, if the factor is unable to collect on the account, the seller will “buy back” the uncollected debt. This type of arrangement thereby shifts the risk of non-payment back to the seller. A Factor (Factoring Company) only funds the invoices you want to receive factoring on, when you want funding.
In non-recourse arrangements, the risk of non-payment falls on the factor. If the account debtor does not pay the invoice, the factor has no right to recover the advance from the seller. The factor takes the loss.
*In medical factoring, non-recourse agreements are most common.
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