As with many types of business, factoring has the potential to optimize your billing process if you are in the healthcare field. The chief attribute that this payment method improves is your cash flow; which then allows you to pursue other endeavors crucial to success in a very competitive field. In the following, we’ll touch on more reasons why you should opt for medical factoring.
Cash Flow Benefits Expanded
The first thing that medical factoring does is improve cash flow – particularly for insurance company-heavy receipts. Insurance companies can take as long as three months to complete a claim and remit payment, which can seriously hamper your cash flow. The factoring company, on the other hand, can take on these receipts (for a fee of about 2%), pay you ~80% within a couple of days, and send you the remaining ~18% after they recoup the balance on the receipts.
In the same vein, this helps make your cash flow status predictable – which is especially important for medical companies that are experiencing rapid growth.
A Payment Solution for SMBs
Another positive attribute of medical factoring is that it is available to small and medium-sized businesses. Other financial vehicles often require collateral – which can be problematic for businesses that are in the infant stage. If you lack assets, then you may be unable to qualify for federal or institutional loans unless your credit rating is stellar.
Medical Factoring Companies Accept Medicaid and Medicare
It’s all in the title: oftentimes, you can have trouble getting traditional companies to expediently honor Medicaid and Medicare commitments; with medical factoring, however, this is not the case. Depending on the company you choose, they will undertake the task of getting payments; in the meantime, they will send you the lion’s share of the funds within a few days. Once they recoup the rest, they’ll send it to you sans the administration/service fee – which is around 2-3%.
Additionally, medical factoring can be set up within a business week once you start the process. This goes specifically for SMBs; if you are a large, robust facility then the process can take up to two weeks. For more information on this and other finance topics, contact Aspen Capital Solutions.