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Finance your Medical Office/Company
- By Peter Abelard
- Published March 7th, 2009
- Medical Business
- Unrated
It is always a wise decision for a business man to implement wise techniques for his business ventures. I would like to advise that factoring your invoices could be the right solution for you. According to the official website here are some of the tips as to how one can finance medical office:
The factoring proposition is very simple. Factoring is a way of financing, in which a factoring company provides you with advance payments based on your outstanding accounts receivable (or invoices). You get funding as soon as you invoice. The factoring funds it and waits to get paid until the insurance companies or Medicare pay the invoices.
Factoring has advantages over loans and lines of credit. First, factoring financing lines do not have arbitrary limits. The maximum amount of monthly financing is solely determined by your ability to invoice. If your business grows, your financing grows automatically. Also, factoring companies don’t require the same collateral that banks do, so new businesses or doctors’ offices can usually qualify easily.
How does factoring work?
The process is fairly simple. Once an agreement is established
with a factoring company, it works as follows:
Factoring is ideally suited for medical offices and testing centers that are growing quickly and cannot afford to wait the usual 30 to 90 days that it takes to be paid by insurance companies or Medicare. It can provide you with ongoing financing, streamline your cash flow, and most of all, relieve the stress of not knowing when you’ll be paid.
The factoring proposition is very simple. Factoring is a way of financing, in which a factoring company provides you with advance payments based on your outstanding accounts receivable (or invoices). You get funding as soon as you invoice. The factoring funds it and waits to get paid until the insurance companies or Medicare pay the invoices.
Factoring has advantages over loans and lines of credit. First, factoring financing lines do not have arbitrary limits. The maximum amount of monthly financing is solely determined by your ability to invoice. If your business grows, your financing grows automatically. Also, factoring companies don’t require the same collateral that banks do, so new businesses or doctors’ offices can usually qualify easily.
How does factoring work?
The process is fairly simple. Once an agreement is established
- Your office submits your weekly (daily or monthly) billings to the insurance company and to Medicare/Medicaid. (note: sometimes this task can be handled by the factor on your behalf)
- Your office sends a copy of the billings to the factoring company.
- The factoring company advances you up to 85% of Net Collectables within 48 hours. Funds are sent by wire or direct deposit. The remaining 15% is called a “reserve” and used to settle billing discrepancies at time of payment. This is returned to you once the invoices are paid.
- The factoring company waits to be paid by the insurance company or Medicare/Medicaid.
- Once the factoring company is paid, they settle out the transaction and rebate you the remaining 15%, less their fee.
Factoring is ideally suited for medical offices and testing centers that are growing quickly and cannot afford to wait the usual 30 to 90 days that it takes to be paid by insurance companies or Medicare. It can provide you with ongoing financing, streamline your cash flow, and most of all, relieve the stress of not knowing when you’ll be paid.