As the natural life-cycle of a business plays out, companies will invariably find themselves in need of more cash than is on hand at the moment. The reasons for the cash necessity being larger than the available amount can be numerous: ranging from the need to purchase elements of expansion to the need to pay off existing bills from a pool of money that has fallen short due to the collections process. No matter what the reason, there are numerous times in the medical business like all other businesses that will result in a need for cash that is not currently in the bank account. In these circumstances, medical professionals must turn to lien solutions to gain access to the necessary funds. Financing options for healthcare professionals take the form of traditional loans and alternative financing sources.
Financing option #1: traditional loans
Traditional medical financing works like any loan, securing inventory as collateral that can be seized and liquidated to cover the loan money if there is a default on payments. Lenders use physical assets like equipment and bank accounts to secure loans with interest over time. If at any time during that process payments are not met, then equipments can be repossessed and sold to recover the loan balance.
The drawback to this type of risky financing is the lack of guarantee that anything will change in the future to bring in additional money necessary to repay the loan plus the added interest. If an expansion is taking place, there is no guarantee that it will attract the added patients necessary to cover the new loan expenses. If it is to cover the costs during a month where collections or revenues fell short, there is no guarantee that there will not be months in the future where the same thing happens, triggering a default and seizure of your business assets. Unfortunately, a medical facility cannot stay operational without the physical assets necessary to practice medicine.
This leaves providers and facilities to ask themselves, “am I willing to risk my entire practice to borrow this money?” Many healthcare professionals will typically answer that question with a no.
Financing option #2: selling medical account receivables
The alternative financing available to medical providers involves a hidden asset not considered in the traditional lending process. Medical accounts receivable financing is the process of purchasing the existing accounts receivable at a slight discount by a medical finance company. The finance company assumes all of the collections risks in exchange for the small discount that they receive when they purchase the account(s). If an account cannot be collected, the facility is not liable at all to repay the money.
Through this type of financing, providers can utilize the money that is owed to them as an asset to generate immediate cash and use at their discretion. There is no collateral necessary, nor is there interest or long term payment plans that have to be accounted for. As opposed to traditional loans there is no hassle and risks associated with selling accounts. The funding company pays you outright for the services you performed.
Contact PROVE today for information on these exciting opportunities and to take advantage of our medical account receivables programs.
