A provider/facility with third party payers has
the ability to accelerate the power of this otherwise dormant asset into a powerful tool that will meet current cash needs
including practice or service growth and development.
Medical Accounts Receivable Funding is a financing method that has significant
benefits when compared to traditional bank financing.
You can
meet the challenges of rising costs, diminishing reimbursements, increasing demands caused by the "baby boomer"
population and changing technology. Rising costs, which can threaten the facility/practice's income and future stability,
can be mitigated. Growing patient/resident demand will require the most up-to-date services and facilities. Access
to additional working capital will overcome all of these challenges.
Traditional financing
program inefficiencies hinder the provider's ability to conduct business, pay staff, order supplies, pay overhead expenses
and grow the business.
Most providers turn to their local banks for working capital loans,
but due to recent banking regulations/lack of ability to lend to small and medium sized business organization make it difficult
to obtain these loans. Additionally the complexity of medical receivables requires an understanding of the medical arena to
properly values this asset.
Medical
accounts Receivable Funding is based on one of the oldest forms of financing in existence today. Factoring dates
back to the 1600's in colonial America. It is not fully understood consequently some business managers/providers think
it is a new form of financing or only for enterprises that are in financial trouble. Others think the cost is prohibitive,
but the facts are...none of these assumptions are correct.
Medical factoring is determined
solely by the provider's ability to generate medical bills, there are no limits--you grow, you factor. Most importantly,
you the provider now have a clear understanding of when you will have access to your cash flows and can finally
concentrate on treating patients.
By removing the Medical A/R
from the balance sheet it may discourage a frivolous medical malpractice lawsuit.
TRADITIONAL A/R WORKING CAPITAL FINANCING FACILITY
Most customers/companies that traditionally paid in 30 days are now paying in 45 days or longer.
Those that used to pay in 45 days are now paying in 60 days or longer...
This has created a challenge for many suppliers/service companies who don't always
have the resources to wait a long time to get paid.
There
is a solid solution that is designed specifically to fix the cash flow problems created by slow paying customers/clients.
this process enables businesses to be paid quickly for their invoices, providing the needed funds to meet current expenses
A/P and fund new growth investments.
Factoring
works as a Financial Intermediary that purchases your invoices at a small discount (similar to a credit card discount) and
pays you upfront for them.
A key feature of Factoring
is that your customer does not have to pay sooner...they pay on their regular terms.
A Liquidity Squeeze is far worse than
a Profit Squeeze. A key management function
is to make sure that a practice/facilities receivables and working capital position are managed efficiently.
With high liquidity, a provider/facility
can take advantage of price discounts, take early payment discounts, reduce short-term borrowing, benefit from a top commercial
credit/bond rating and take advantage of market opportunities only offered by vendors to their very best customers. The Covid
supply chain problem has taught many the suppliers to deliver to their best paying customers first.
Short Term Debt should be matched to Short Term Expenses
and Long Term Debt should be matched to Long Term Expenses.
