Medical Factoring: How to Finance your Healthcare Business without a Loan

There are few bigger pains for healthcarefollowing characteristics. First, it should be able to
industry professionals than having to wait 30, 60accelerate your insurance payments so that you
or even 120 days to collect payments fromcan get them quickly rather than slowly. Second,
insurance companies, HMOs and Medicare/Medicaid.the solution should be able to grow with your
The healthcare industry is riddled with complexbusiness. So, if your business grows its billings, the
billing, coding and processing rules that create verysolution should be able to adapt the financing it
long payment cycles. This can be very difficult fordelivers, seamlessly. Third, the solution should allow
medical offices, testing and diagnostic centers,you to finance significant growth. Maybe three to
medical supply companies, or any healthcarefive times your current revenues - or more.
related business, for that matter. There areThere is a solution that meets these criteria and is
always many ongoing expenses that can't wait.available to the healthcare industry. The solution is
There is rent that needs to be paid, officesto factor your medical receivables using a
expenses that need to be covered, and payrollfinancing tool called medical factoring. Medical
that must be met.factoring allows you to accelerate your payments
This situation creates a problem for mostfrom insurance companies, HMO's or Medicare
healthcare businesses. On paper, the businessMedicaid. It enables you to receive a substantial
may look very profitable and seem to be doingamount of your net collectables within days of
well. But in reality, most of the money is tied up inbilling, streamlining your cash flow dramatically.
slow paying invoices (also known as accountsMedical factoring, a specialty form of general
receivable) with little cash to show for it in thefactoring, allows you to sell your claims and
bank.receivables to a factoring financing company. The
When faced with tight cash flow, most healthcarefactoring company buys them - at a small
professionals turn to their bankers. Medical doctorsdiscount - and pays you with immediate funds.
can usually qualify for signature loans or lines ofThe factoring company waits to be paid while you
credit. Other business professionals are not soget to use the funds to meet business expenses.
lucky. In reality, a loan or line of credit may helpAs opposed to traditional banking financial
you in the short term, but will not solve the mainproducts, medical factoring has no arbitrary limits.
problem. Why? Well, loans are good for buyingYou can factor or sell as much revenue as you
equipment or large capital expenditures, but notcan generate, making it the ideal financing tool for
for covering recurring and ongoing expenses. Agrowth.
line of credit is a better solution, but they usuallyHowever, factoring is not the best solution for
have fixed limits. What happens if the businessevery situation. It works best in instances where
grows past the limits of the line of credit? Manyyour main challenge is that you cannot afford to
healthcare professionals usually find out, the hardwait to get paid in 60 to 120 days. It helps you
way, that the bankers that were quite happy tomeet ongoing and recurring expenses such as
extend the first loan or line of credit will not be sorent, payroll and lease payments. Medical factoring
helpful at increasing it. Unfortunately, bankersis an ideal solution for medical offices, rehabilitation
absolutely hate it when businesses came back tocenters, medical testing and diagnostic centers,
the well for more money.medical supply companies and small to mid sized
If you look at the problem at hand, you will soonhospitals.
realize that the perfect solution should have the