Factoring for Doctors: Is This Your Best Option?

Doctors who run their own clinics invariably need money to continue their practice. That’s a problem inherent in the industry, since insurance companies are the ones paying the bills and they are notoriously slow payers. Sometimes they don’t even pay the bill in full. This is why many doctors ask for loans, and why factoring for doctors has become immensely popular.

But if you’re a doctor, do you try to get loan or do you take advantage of the services of a medical factor?

Loans for Doctors

Some lending institutions offer loans specifically for doctors. Like most loans, you get a specific amount and then you pay every month. What you need is a steady stream of patients, and every month should bring in enough cash to enable you to make your monthly payment for the loan.

The loan amount you get depends on several factors. How long you’ve trained, your work experience, and even your specialty can affect this amount.

Medical Factoring

Technically, this is not a loan at all. The medical factor takes your invoices, and in return you get an advance on the value of the invoice. You may get as much as 80% of the value right away. The last 20% will be sent back to you once the insurance company pays the amount on the invoice in full, minus the fees for the medical factor.

For some clinics, the advantage of medical factoring goes beyond merely getting an advance. Medical factors deal with the insurance company, and they take care of the payment collection. This allows you to fully concentrate on providing the right care for your patients. You won’t have to hire additional employees to collect the payments for you.


So which is better for you? It all depends on what you need the money for, and what’s actually available for you.

Let’s say for example you need the money to expand your business (or buy a high-end medical equipment), or you want to take care of a debt that’s charging you a very high interest rate. Then in all probability you’ll need a medical loan. You can take the time to apply for the loan, and since it’s a one-time problem you can afford to go through the excruciatingly complicated loan application process.

But if you have a working cash flow problem, you’ll need either a line of credit or a medical factoring service. Since a line of credit can be very difficult to set up and there may be a limit involved, your only other viable choice is factoring.

With factoring for doctors, there’s no real limit except for the value of the invoices you’re pulling in. The higher you charge your patients, the more leeway you get in terms of the advance money you will receive. Once you’ve set up a factoring line for your business, you don’t need to reapply for more advance funds if you need them. You only need to give the factor more invoices.


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