How the Medical Industry Can Use Accounts Receivable Financing
The medical industry has many unique challenges. One of these challenges is keeping the practice or medical institution functioning when the practice needs working capital. The healthcare industry tends to be weighed down by accounts receivables from insurance carriers. Likewise, it may be difficult to keep track of invoices. The last thing that the medical industry needs are to distract from providing medical care. This is why accounts receivable financing is a great solution.
Many companies offer to finance to the medical industry. These companies have customized processes that are specific to medicine. Medical factoring is when the practice sells their accounts receivables to a financing firm. The practice provides care to the patient, and then the medical insurance company receives the bill on behalf of the patient. The medical industry sells these receivables to a financing company who then releases a percentage of the net collectible amount for a small fee. These fees are usually about one to five percent. The financing company assumes responsibility for collecting the receivable amount.
There are a lot of advantages to using accounts receivable financing in the medical industry. For instance, most funding companies release the funds in about a day or two. They will also provide regular reports to help with the billing process. To have cash flow can completely change medical practice. For instance, a medical facility can then pay for better services, equipment and even pay better support staff. This is a lot better than a loan because it just advances the cash that the practice would get already.
Accounts receivable financing is one of the most popular forms of financing in the medical industry. This is the case for several reasons. It allows the practice to have access to quick cash. It stimulates the growth of the practice and allows the health industry to expand. Most medical equipment is expensive and yet doctors need to be able to keep up with advancing technology. Not only will hospitals retain more patients, but also patients will receive a higher standard of care.
Accounts receivable financing is one of the most hassle-free financing options. The process itself is quick and easy. You don’t have to take a lot of time to find a lender or to be qualified for this type of financing. To make it even better, the practice doesn’t have to wait long for the money. Most practices need increased cash flow right away and this type of financing provides that.