Cash flow can be incredibly tight for small practices and partnerships that work independently in today’s healthcare landscape. Given that, health care financing packages that are designed to work with your business cycle are integral to your success. You might have heard about how medical factoring helps hospitals maintain a steady cash flow even during the tightest parts of its business cycle, but you might not realize it is available to any medical business that processes insurance claims, provided they meet the requirements of the due diligence review.
Setting up a medical factoring arrangement that works as an ongoing cash flow management tool can take a couple of weeks or more because it does require an on-site review and adjustments to come into compliance with the financing company’s record-keeping and communications policies. The upside is, the companies offering this form of financing understand your needs and business cycle, and they structure advances and fees to be accessible to the medical community.
Your practice’s cash flow does not need to create a bottleneck that affects your personal finances. With the right health care financing tools, you can ensure your regular outgoing cash needs are met, including those payments to yourself that allow you to keep your personal life well-managed. As part of a larger financing strategy, it helps even out your incoming cash so you have a more tangible expectation of the size of incoming payments and their timing. This lets you make other debt payments more easily, providing you with the means to raise your credit rating and finance the lease and loan packages that will let you offer your patients more options.
The important thing to remember about medical factoring is that it can’t fix all your financial issues right away. What it can do is provide you with the regular incoming payments you need to structure your outgoing debt payments, tax obligations, and costs of services like payroll and medical supplies. Typically, the advance rate is low enough that the second round of incoming payment will arrive after the fees and advance have been deducted, but if your factor offers over-advancing during tight times, you might find that is not always true.
Using invoice financing effectively for your insurance claims means understanding the range of options available to you and the costs and consequences of each. That takes some time to master, but it can also be a transformative experience for practice. Do your research, and find out more about how this kind of health care financing can help your business thrive.