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Medical Factoring Finances your Healthcare Business without a Loan

April 16, 2011 By

Owning any type of healthcare business can be financially rewarding and at the same time very demanding.  Mainly because of having delays between 15 to 90 days to get claims paid by private insurance, Medicare/Medicaid and HMOs. These obstacles with revenues in general have slowed also due to the recession. Medical factoring is more of an important tool now more than ever because banking guidelines have changed over the past few years and bank lines of credit have been cut by more than 1 trillion over the last year for businesses.

However, if you own a healthcare practice, DME, hospital or medical staffing company you have expenses that must be paid like clockwork. Payroll needs to be met. Rent needs to be paid. Not surprisingly, all these obligations have one common element – you either pay them or you go out of business.

This leaves you with two possible options besides medical factoring, either business loan or a line of credit. With either you will have a cash reserve sitting at the bank or you need to get financing to cover the wait. Banks almost always require considerable collateral and three years of audited financials. To make things more complicated, most bank financing has maximum limits. Much like a credit card maximum, once you reach it, that is the end of the line. Banks will not loan on third-party payors (i.e. commercial insurance companies, HMO’s, Blue Cross/Blue Shield, Medicare and Medicaid). Even though the largest asset of most businesses is their accounts receivable, most banks won’t lend money on that asset.

The desirable alternative is to factor your medical receivables with medical factoring. Medical factoring provides you with financing based on your insurance claims, eliminating the wait and providing you with funds to operate your business. Contrary to traditional financing, you have no set limits. You can factor as many insurance claims as you can generate. It’s really a tool for growth.

Factoring is the purchase of a medical provider’s third party receivables at a discount. The factoring company advances 75% to 85% of the expected net collectible value of the billings in immediate cash, which is wired directly to the provider’s bank account. The remaining amount is called the reserve and is remitted back to the medical or staffing when the government or insurance company pays the bill less the factoring fee charged during the period.

The biggest benefit from factoring your medical receivables is that your cash flow will become predictable. As opposed to waiting 30 to 90 days hoping your medical claims will be paid soon,  factoring gets you paid  with certainty in 24 to 48 hours.

Medical factoring is easy to implement and incorporate into your business. Here is how it works.

1. You send your claims to the insurance company and to the factor

2. The factor advances you up to 85% of your expected net collections

3. 15% is not advanced and is used as a reserve to handle charge backs

4. You get immediate use of the funds while the factoring company waits

5. When the claim is paid, the transaction is settled

In today’s economy where the 30-day invoices are fast becoming 45 to 60 days as the norm. Medical Factoring can allow your healthcare business to make the transition from negative to positive cash flow situation.

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How Factoring Receivables Can Grow Your Business

April 2, 2011 By

Do you have commercial or government clients? Working with commercial and government clients can be very profitable. However, these clients also tend to pay invoices in 30 to 60 days, which can drain your company’s working capital. Many times, these great but slow paying customers can drag your company’s performance down.

 

If your working capital is tied in slow paying customers, eventually you’ll have to start turning away new sales. Even worse, you may miss payroll or key supplier payments. Before long your company will be stuck in neutral or about to enter a death spiral. The solution, of course, is to obtain some working capital.

 

Going to the bank for business financing (e.g. a working capital business loan) is tricky and won’t work for most business owners. Banks usually require 3 years worth of financial statements, detailed business plans and will take months to make a decision. In the end, you may – or may not – get the capital you need. However, if your biggest challenge is that your customers take up to 60 days to pay their invoices, you should consider factoring your receivables.

 

Factoring receivables enables you get an advance on your slow paying invoices. This provides you with the necessary working capital to make new sales, meet payroll and pay rent. And as opposed to conventional bank financing, invoice factoring is easy to obtain and quick to set up.

 

Factoring financing is easy to use. It works like this:

 

1. You deliver your product/service to your customer

 

2. You submit the invoice to the factoring company for financing

 

3. The factoring company advances you up to 85% of the invoice as the first payment

 

4. Once your customer pays for the invoice, the remaining 15% is advanced, less a small service fee

 

Factoring services fees can range from 1.5% to 3% per month, depending on your business volume and other criteria.

 

There are a number of advantages to using factoring. For starters, it’s relatively easy to qualify for the service. The biggest requirements are that you work with reputable customers and run a good business. And it’s also easy to setup. Usually you can get financing in just a few days. All of these features make receivables factoring a great alternative for new and established companies.

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

March 9, 2011 By

There are few bigger pains for healthcare industry professionals than having to wait 30, 60 or even 120 days to collect payments from insurance companies, HMOs and Medicare/Medicaid. The healthcare industry is riddled with complex billing, coding and processing rules that create very long payment cycles. This can be very difficult for medical offices, testing and diagnostic centers, medical supply companies, or any healthcare related business, for that matter. There are always many ongoing expenses that can’t wait. There is rent that needs to be paid, offices expenses that need to be covered, and payroll that must be met.

This situation creates a problem for most healthcare businesses. On paper, the business may look very profitable and seem to be doing well. But in reality, most of the money is tied up in slow paying invoices (also known as accounts receivable) with little cash to show for it in the bank.

When faced with tight cash flow, most healthcare professionals turn to their bankers. Medical doctors can usually qualify for signature loans or lines of credit. Other business professionals are not so lucky. In reality, a loan or line of credit may help you in the short term, but will not solve the main problem. Why? Well, loans are good for buying equipment or large capital expenditures, but not for covering recurring and ongoing expenses. A line of credit is a better solution, but they usually have fixed limits. What happens if the business grows past the limits of the line of credit? Many healthcare professionals usually find out, the hard way, that the bankers that were quite happy to extend the first loan or line of credit will not be so helpful at increasing it. Unfortunately, bankers absolutely hate it when businesses came back to the well for more money.

If you look at the problem at hand, you will soon realize that the perfect solution should have the following characteristics. First, it should be able to accelerate your insurance payments so that you can get them quickly rather than slowly. Second, the solution should be able to grow with your business. So, if your business grows its billings, the solution should be able to adapt the financing it delivers, seamlessly. Third, the solution should allow you to finance significant growth. Maybe three to five times your current revenues – or more.

There is a solution that meets these criteria and is available to the healthcare industry. The solution is to factor your medical receivables using a financing tool called medical factoring. Medical factoring allows you to accelerate your payments from insurance companies, HMO’s or Medicare/Medicaid. It enables you to receive a substantial amount of your net collectables within days of billing, streamlining your cash flow dramatically.

Medical factoring, a specialty form of general factoring, allows you to sell your claims and receivables to a factoring financing company. The factoring company buys them – at a small discount – and pays you with immediate funds. The factoring company waits to be paid while you get to use the funds to meet business expenses. As opposed to traditional banking financial products, medical factoring has no arbitrary limits. You can factor or sell as much revenue as you can generate, making it the ideal financing tool for growth.

However, factoring is not the best solution for every situation. It works best in instances where your main challenge is that you cannot afford to wait to get paid in 60 to 120 days. It helps you meet ongoing and recurring expenses such as rent, payroll and lease payments. Medical factoring is an ideal solution for medical offices, rehabilitation centers, medical testing and diagnostic centers, medical supply companies and small to mid sized hospitals.

Commercial Capital LLC

We can provide you with a medical factoring and medical receivables factoring quote for free. Marco Terry, the president, can be reached at (866) 730 1922


Article from articlesbase.com

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Small Business Funding Through Invoice Factoring

March 2, 2011 By

Article by Kristin Gabriel







Today’s troubled economic environment means that businesses are under constant pressure to maintain profitability. Are you worried about the effects a recession can have on your business, or the financial stability of your clients? Is your company lacking capital? Or does your business experience seasonal fluctuations for its products and services? If so, a factoring company can help.

If you are spending too much time and money on your accounts receivables and collections, invoice factoring can help.

What is invoice factoring? It is the age old practice of using your invoices or receivables as collateral so that a factoring company can give you an infusion of cash. Historically factoring has been around for more than 3,000 years. Most recently, however, trends are for something known as single invoice factoring, which can also be called spot factoring. This is when you factor one invoice at a time.

Factoring is simply a way to acquire business capital without having to make any type of payments to a lender. It’s much better than a typical business loan because you don’t have to worry about monthly payments accumulating every month. Another advantage is that many companies do not want to worry about getting paid by their clients 60 or 90 days after they send out their invoices – because it often creates a financial burden on their business to have to wait that long.

Plus these days, some businesses may suffer from a less-than-perfect credit score. Factoring firms are experts at helping you minimize your risk from bad debt while at the same time they help you improve your cash flow dramatically. A few factoring companies are able to provide cash flow within two hours and it could be wired directly to your account. Other companies can take up to 48 hours.

The factoring company will collect your receivables for you, which provides you with business capital. This also minimizes your bad debt by making sure your clients pay on time. It can give you peace of mind in having a positive cash flow. Uncertainty regarding cash flow is removed, and your company can be more positive about the future since new orders are more easily filled, employees, utilities and vendors are paid on time and debt payments to credit card companies go out on time.

The professional fees among various factoring companies are competitive. Each client’s circumstances will vary and may have an impact on the fees. Some companies can advance up to 90 percent of invoices you are selling, and they don’t expect to buy 100 percent of your receivables.

Ultimately, invoice factoring can take away the worry regarding your clients making their payments, and you can focus on new busniess tather than chasing down slow or no pay clients. Look for invoice factoring companies online today, and start factoring.



About the Author

Kristin Gabriel works with The Interface Financial Group, North America’s largest alternative funding source for small business. The company provides short-term financial resources including accounts receivable factoring and serves clients in more than 30 industries. Go to http://www.ifgnetwork.com

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Invoice Factoring Can Save Your Business

February 26, 2011 By

Invoice factoring is the basic practice of selling invoices to financial factoring companies for the purpose of receiving money right away. Smaller companies often fall into the financial trap of not having available resources and therefore sell their invoices to financial agencies in order to gain working capital. This practice does not require the business to swallow more debt and in fact operates in an opposite manner. Small businesses that don’t utilize the financial tool of accounts receivable factoring acquire more debt by waiting for the accounts receivables to be paid.


Invoice factoring is typically used as a measure to avoid falling further into debt. Without this effective financial management tool many businesses have to adopt more loans or alternatively, put up more collateral for existing loans. Invoice factoring is available at a minimal fee, which makes it an attractive substitute to assuming more debt. In fact, accounts receivable factoring fees are usually set up by way of discount and these rates differ from individual company to company. The great advantage to this type of liquidation is that there are no interest fees to pay and the result is most often better profit margins.


There are many financial companies that offer invoice factoring services. The individual agencies will set up a company with the right set of accounts receivable factoring parameters. After the professionals from the invoice factoring agency assess the individual situation, they will set up the receivables to be factored and proceed accordingly.


Financial agencies that offer accounts receivable factoring are located worldwide and support every industry under the sun. Even truck drivers can sell their invoices to an invoice factoring financial service to free up capital fast. One of the most attractive aspects to an accounts receivable factoring agency is that they customize the service to each business’s individual requirements.


There are as many different types of invoice factoring agencies, as they are rates for factoring invoices. Some purchase the invoices no matter what the receivable total is and some accounts receivable factoring agencies will only liquidate invoices that accumulate more than 0, 000. Generally the higher the invoice factoring total is, the lower the rates will be to take advantage of this financial escape. In cases where the total is in excess of a hundred thousand, a solid accounts receivable factoring agency will offer rates that can be as low as two per cent!


There are many different types of invoice factoring agencies. For example, some agencies will only serve those businesses in the medical profession while others only serve purchase order factoring. There are some accounts receivable factoring agencies that are specifically designed to cater to small business and offer many great advantages that a larger agency wouldn’t necessarily offer. Despite the type of invoice factoring agency that is required for every individual business need, accounts receivable factoring typically happens within a 24 hour time period.

Troy Degarnham is the author and webmaster of http://www.accounts-receivable-financing.info, an informative website about Invoice Factoring. Extensive help and tips on account receivable factoring, factoring companies, asset, small business, non recourse and other factoring financial services.


Article from articlesbase.com

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