Medical factoring has become a welcome change in recent years for healthcare providers due to the antiquated billing and payment system hospital and medical offices are accustomed to. Historically, there has always been a cash flow struggle with payment processing due to slow reimbursement of insurance, delayed payment from patients, and speed of which healthcare companies were getting paid. Medical Factoring has resolved many of the issues once burdening healthcare providers and has opened up opportunities for growth and success.
Who benefits from medical factoring?
1. Vendors – Medical vendors provide equipment, medical goods, transportation services, and even medical staffing companies. These companies are often paid by hospitals and healthcare providers directly.
2. Providers -These are typically individuals or institutions like doctors and dentists. These vendors typically get paid by government programs like Medicare and Medicaid as well as insurance companies who fight reimbursement. Government programs like Medicaid and Medicare often come with lots of red tape, paperwork, and lengthy times to process receivables.
How do vendors and providers benefit by incorporating medical factoring?
Simply being able to quickly have access to funds allows both vendors and providers to keep payroll up to date, stay current on malpractice insurance, continue paying for office supplies and utilities and investing in the growth of their company.
These companies benefit from being able to get advances in their funds with a factor relationship. They are able to provide outstanding invoices with longer net terms beyond 30 days to the factor and receive the money closer to 3 days, depending on the terms they set with the factor. This eases up their cash flow and allows them to be more confident about providing whatever business needs they have without the wait and potential delays of conventional financing .