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The term “medical business factoring loans” is actually a misnomer. Factoring isn’t technically a loan at all. It involves the sale of your invoices to the factor. You get the typical cash advance that’s 80% of the value of the invoice, and then the rest of the payment is sent to you once the customer pays in full and the factor gets its fees.
Medical factoring is very different from bank loans, and in some ways, it’s better than bank loans.
- Factoring can be availed quickly. You only need a few days for your application to be evaluated and decided upon, unlike bank loans which can take weeks. And as a bonus, medical factoring has a higher approval rating than a bank loan. Banks reject the majority of loan applications from small businesses.
- You get your cash advance fast. Once you give the factor your invoice, it may only take as little as 48 hours for the cash advance to show up in your bank account. This can be a good thing for your business, because of the way insurance companies and other customers pay. You can boost your working capital, so that you can meet payroll, pay for utilities, and make payments for the various expensive medical equipment you’re using.
- Medical factoring, with the right factor, can be very flexible. Some factors may require you to finance in bulk. But other factors may allow you to choose which invoices to finance. This means you can control just how much financing to pay for, instead of getting advances when your working capital levels are doing great.
- You don’t have to collect payments from insurance companies. Dealing with insurance companies can be infuriating, to say the least, and you certainly don’t need the added stress. Your work in the health care industry is stressful enough as it is. It’s a well-known fact that getting insurance companies to pay is like getting water from stone.
Since the factor takes care of the payment collection and the invoice tracking, you’re freed from this difficult task. You also don’t have to hire personnel to do this for you, since it’s already part of the factor’s services. The factor can handle Medicare and Medicaid payments as well.
There’s a widespread anger in the health care industry against private insurers, and clinics and hospitals are closing down at an alarming rate. The lack of funding and the intransigence of insurance companies have certainly contributed to the “malaise” in the healthcare industry.
Medical factoring is a way to help revive the health care industry. It offers timely financing in a time when banks are no longer as generous in granting loans to small businesses such as pharmacies and medical clinics. And doctors and nurses can concentrate on healing the sick and the injured, while the factor deals with insurance companies in an efficient manner. With medical business factoring loans, everyone can get better.