Is Medical Factoring Right for your Medical Office?
If you own a medical office that is growing, sooner or later you’ll run into cash flow issues. Unfortunately, every business that is growing – regardless of industry – runs into them. When faced with cash flow problems, most medical offices try to get a business loan or a line of credit. Although business loans can work well, they are not a panacea. For starters, they are not easy to get. But more importantly, they have set maximums.
This means that you may outgrow the business loan if your business keeps growing quickly. This is a very important point because once you have outgrown a loan, it is very difficult to try and get a new one. The first one must be paid off. A better option may be medical factoring. Medical factoring is a financing tool designed to help medical offices.
It eliminates the 60 to 90 days it takes to get claims paid and accelerates payment time to between 2 to 7 days. This can be a huge advantage if slow paying claims have put you at risk of: 1. Missing payroll 2. Missing rent or other payments 3. Delaying important hiring decisions Medical factoring can provide you with: 1. Funds to meet payroll 2. Funds to pay rent and vendors 3. Financing based on your claims. The more you bill – the more financing you get As opposed to business loans, medical factoring is easy to qualify for. The main requirement is that your office be up to date in taxes and be free of any tax or commercial liens.
And it’s also quick to set up. It usually takes about 10 days to set up an account for initial funding, but all subsequent fundings happen within 24 hours of submitting the request. The process is very simple: 1. You submit claims to insurance companies and send a copy to the factoring company 2. The factoring company advances between 70% - 85% of your net expected collections 3. You get immediate funds. The factoring company waits to get paid 4. Once the factoring company is paid, the transaction is settled. Because of this, medical factoring is an ideal tool to streamline your medical office’s cash flow.
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