Learn How To Finance Your Healthcare Business With Medical Factoring

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.

Invoice factoring Group can provide you with a medical factoring and medical receivables factoring quote for free at http://factoring.qlfs.com/html/medical_offices.html . Marco Terry, the president, can be reached at (866) 730 1922

Do You Qualify for Factoring?

This article has been created to give you straight forward content hoping to provide information into some of the things that factors are looking for when qualifying a prospect before entering into a financial relationship with them.

Lets face it, your time is very valuable and you do not need to waste it filling out applications or talking on the phone when you may be able to identify issues in this article that would prohibit you from being able to enter into a factoring relationship.

Some of this information will be basic and you may already be familiar with it, however some may not. Just read through the article and I am sure you will find some helpful information.

Lets take a look at what factoring is:

Factoring is a form of financing where a business sells its creditworthy commercial accounts receivable to a financier known as a factor.

This is a good starting point; you need to be invoicing creditworthy businesses for your product or service. Your product must be delivered and your services rendered (no pre-bills). If they are not creditworthy and you are already having collection problems, a factoring company will not be interested in purchasing those receivables. You may need a collections service.

How much do you invoice each month:

If you are invoicing under $10,000 a month this will limit the number of factoring companies that will enter into a relationship with you. If you are speaking with a factor, let them know up front what your monthly volume is and find out if they are willing to work with companies of your size. This could save you from filling out an application and wasting your time with that particular factor.

How many customers do you invoice:

Factoring companies prefer to fund companies with more than one customer; this helps them lower their risk. If you have just one customer, the factoring will have a concentration issue, meaning if something happens to your customer they do not have any other receivables from other customers to recoup their money. Let the factoring company know this up front as well. Some factors will not work with you if you only have one customer. (If your one customer is large and stable this will help).

Do you have any financing currently in place:

If you have an existing loan or line of credit you need to find out up front if the bank has a UCC-1 against your receivables. The factoring company must have 1st position on your receivables to be able to enter into a financing relationship with your company.

I would suggest if you have a current loan or line of credit to double check and make sure of this.

I have had many businesses tell me that the bank did not have their receivables as collateral and then proceed through the application process and return the contract.

The factoring company would begin due diligence and the lien search would return a current UCC-1 on the receivables. Many times the customer does not realize the bank placed a blanket lien on their company covering all assets, including the accounts receivable.

If this is the case, you still may qualify for factoring. If your loan or line of credit is small enough, the factor may be able to pay off your loan or line of credit out of your 1st advance and the bank has no choice but to subordinate (release) the receivables. If not, they may have enough collateral that they will allow the factoring company to have 1st position on the receivables and allow you to get the needed capital for your company.

So if you have current financing, check on this issue. You may find out the bank will step up to the plate and allow you access to more funds when they realize you are about to leave.

This has happened many times.

Also be aware that our factoring companies can help negotiate a subordination, so discuss this with us if you need more clarification on this topic.

Your aging report:

Your aging report is very important to a factoring company; this is the pulse on your cash flow. An accurate detailed accounts receivable aging report should be aged from invoice date and not due date. Some companies accounting software is set up to age the receivables from due date, this will reflect an inaccurate report to the factoring company.

If you have an unhealthy aging report you will have a hard time qualifying for factoring. Plus the fees you pay to a factor increase as the days outstanding increase.

Make sure you have a cash flow issue and not a collections issue.

Remember, creditworthy customers are the key.

Outstanding taxes, liens, judgments, litigations, felony convictions or bankruptcy

If you have any of these issues, it does not mean you can't qualify for factoring, you just need to be forthcoming at the beginning and find out if the issues are too complex for the factoring company to work through. This may save you some time.

Are you incorporated:

Some factors will not work with Sole Proprietors, others will, we have some that do. Find out at the beginning of the conversation.

Financial Statements:

Some factors will require financial statements and others will not.

Providing financial is usually where you will find the most aggressive rates available.

If you do not want to deal with providing financial statements, ask up front if they are required. We have programs available that requires no financial statements.

Personal Credit:

Even though your customers are the primary focus, your personal credit is taken into consideration. If your personal credit has taken some severe hits recently, discuss this up front with the factor to find out how much it will be taken into consideration.

This covers some of the basic, I hope it helps!

Thanks for reading.

Mark Little is President of Diversified Funding Services, Inc. He can be reached at 888-603-0055. His company website can be found by Clicking Here and the Company blog Click Here.

Truck Invoice Factoring

 

Truck invoice factoring is the outright buying of the invoices of business establishments by truck invoice factoring companies. This helps companies to maintain smooth cash flow. Most truck invoice factoring companies are commercial establishments and deals in the purchase of invoices and some offer other financial supports. Truck invoice factoring used to be exclusively the realm of big business houses, but now it is available for small business establishments, as well. The industry is worth 100 billion dollars today. Cash to be received often hampers the smooth functioning of small and large companies and truck invoice factoring is a welcome relief from this.

Most companies for the purchase of invoices use certain criteria. The service fees vary from company to company. Credit history of the customer, amount in the invoice and total business volume are some the criteria used while purchasing an invoice and in determining the service fee. Before engaging in business with a company, truck invoice factoring companies check accounts receivable aging report, the credit limits of existing customers, and the company’s track record. Not satisfied with merely the company’s report on customer’s credit history, most truck invoice factoring companies engage in an independent enquiry about the customer’s credit history. Companies can also negotiate with truck invoice factoring companies once they meet all the qualities.

Through truck invoice and factoring, companies can save time and money and use work force spend on retrieving money from customers for other purposes. Almost all types of industries make use of truck invoice factoring. Truck invoice factoring is ideal for those companies that are on the path of expansion and those that needs to meet loan deadlines. Some factoring companies provide finance to start-up companies.

The service fees of truck invoice companies are sometimes more than the traditional finance companies. The greatest advantage with it is that companies will not be falling into debt trap. Companies can also do away with discounts that they used to offer for earlier payment to customers.

Invoice Factoring provides detailed information on Invoice Factoring, Invoice Factoring Companies, Invoice Factoring Discounting, Invoice Factoring Rates and more. Invoice Factoring is affiliated with Loan Factoring.