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Although many experts speak of gloom and doom in the medical industry, the fact is that this industry keeps growing by leaps and bounds. Each year, the demand for medical services, medical tests (eg MRI Centers, Testing Centers, etc) and medical supplies keeps getting stronger. It is expected that this trend will continue as the population ages.
However, although the growth trend looks good, running a medical-related business remains increasingly difficult. In the past, physicians and suppliers can expect to get large and quick reimbursements for their services. The cash flow is reasonably easy to administer. However, Medicare, Medicaid and 3rd party insurance companies have put in place strict compensation guidelines. These guidelines can be summarized in two simple points: you can look to receive less money than before and should be prepared to wait longer to receive payment.
This creates a “perfect storm” for companies in the medical industry. On the one hand, you pay less and get more time waiting for their money. Moreover, its operating expenses remain the same or maybe higher. Have yet to pay its employees and its suppliers. In almost all cases, which limits their ability to pursue new opportunities and grow your business. In some cases, may even endanger his ability to continue operating your business.
Is there any way to “fix” the problem of liquidity?
If your core business cash flow problem is not being able to afford the luxury of waiting 30 to 90 days to get paid by insurance companies and Medicare, then the factoring invoices can be the right solution for you.
Factoring is a very simple proposition. Factoring is a form of financing, in which a company offers advances on their accounts receivable (or bills). You get funding as soon as the bill. Factoring and funds it expects to receive payment until the insurance companies or Medicare pays the bills.
Factoring has advantages over the loans and credit lines. First, factoring financing lines is not arbitrary limits. The maximum amount of funding is solely determined by their monthly ability to invoice. If your business grows, it grows automatically funding. Also, factoring companies do not require the same safeguards that banks, 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, operates as follows:
1. His office says weekly (daily or monthly) charges to the insurance company and Medicare / Medicaid. (note: sometimes this task can be handled by the factor in its name)
2. His office sends a copy of invoices to the factoring company.
3. The factoring company advances up 85% of Net Coleccionismo within 48 hours. The funds are sent by wire or direct deposit. The remaining 15% is called “reservation” and are used to resolve billing discrepancies at the time of payment. This is refunded once the bills are paid.
4. The factoring company expects to be paid by the insurance company or Medicare / Medicaid.
5. Once the factoring company is paid, to settle the transaction and cut the remaining 15%, less than its quota.
The advantage of factoring
Factoring is ideal for medical offices and testing centers that are growing rapidly and can not afford to wait the usual 30 to 90 days it takes to be paid by insurance companies or Medicare. We shall comply with the financing, streamline your cash flow and, above all, relieve the stress of not knowing when you’ll be paid.
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