Improve Your Practice’s Cash Flow With Medical Factoring

You’ve completed your undergraduate degree and medical school, and gone through your internship. Now you are finally achieving your life-long dream of opening up your own practice. In addition, you have developed a steady patient base. However, you find that you are facing the financial struggle that plagues many doctors, and that is waiting for the insurance claims of patients to be paid out. Unfortunately, you have your own bills to pay, including staffing payroll and for medical equipment and supplies. However, there is a solution to your problem and that is the short-term financing referred to as medical factoring.

What is Medical Factoring?

Medical factoring is a short-term loan that allows doctors to use their claims as part of their assets. As approved claims are guaranteed funds, they are easily viable as assets toward the repayment of your loans. For small practices and those practices that are rapidly growing, having medical factoring is ideal. In order to find the right lender, medical practices should understand that certain lenders only specialize in practices of a certain size while others typically deal with a certain industry.

How Does It Work?

Again, this is a type of loan, but the advantage is that unlike typical loans, there is less of a turnaround time and the loan is easier to underwrite. Potential medical practices start by applying for a loan under medical factoring terms. After the underwriting is approved, practices are then allowed to submit any of their unpaid approved claims to the lender. These funds are dispersed in two installments, with the bulk of the money distributed in the first installment. The lender gives the practice 80% of the claim up front, usually within 48 hours of submission, allowing the medical practices to keep their cash flowing. The remaining 20% of the claim is dispersed after the claim is paid with any fees and interest subtracted by the lending company.

Medical factoring ultimately improves your business. First of all, it ensures that there are minimal disruptions in your cash flow, allowing you to not only make payments and payroll on time, but also preventing the stress and worry of when you will be paid. Additionally, because lenders look at the claims history of insurance companies, you will better be able to determine the likelihood of payment, improving the quality of your clientele.

If you want to keep generating a positive cash flow, you should heavily consider taking on medical factoring as an alternative. Medical factoring ultimately reduces the worry of financial burdens, allowing you to more fully realize your dream.

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