Factoring is when a firm sells its accounts receivable to a third party (the factor). When a firm is not confident in its ability to collect on its credit sales, it may sell the right to receive payment to the factor at a discount. The factor then assumes the credit risk associated with the accounts receivable. Factoring allows the firm access to working capital immediately, which is especially important when it has a cash flow problem.
Providers in the healthcare industry are susceptible to cash flow shortages. Physicians, nursing homes, hospitals, medical equipment companies, and other healthcare providers that depend upon payments from insurance companies and government programs can face severe cash flow challenges caused by slow payments.
Typical cash flow challenges confronting healthcare providers include:
- Doctors, group practices and urgent care clinics: Overhead to keep an office operating, staff salaries and supplies are just some of the expenses physicians must pay out regularly to keep their offices open to provide care for patients.
- Nursing homes: Maintain staffing levels and services to care for the residents, overhead, and other operating expenses that must be paid.
- Diagnostic and imaging centers: On top of overhead and operating costs, most facilities lease the MRI, CT scan, PET scan, X-ray, and other diagnostic equipment at an enormous monthly cost.
- Physical therapy and rehabilitation centers: Payments for equipment, supplies, facilities, and other operating expenses can create cash flow issues if insurance and payments from government programs are delayed.
- Home health care agencies: Companies providing care to people in their homes as they recover from medical procedures, injuries, or illnesses must meet weekly payroll expenses for the nurses and health care aides working for them. These costs, added to other operating expenses, make it essential to have a continuing source of readily available cash.
- Companies providing home medical equipment: The sale and rental of oxygen equipment, wheelchairs, hospital beds, and other equipment supplied to patients convalescing at home is how these companies make money. A shortage of cash as they wait for payment from Medicare, Medicaid, workers’ compensation, and private health insurers can hamper a company’s ability to acquire additional equipment as needed.
An answer to the cash flow problem
Medical providers have discovered a solution to their cash flow problems through medical accounts receivable financing. The medical industry was often excluded from this type of financing because of the complexity of billing methods and receivables servicing. Taking into consideration these complexities, PROVE’s Medical Lien Financing programs are the solution to your cash flow problems. It is the same solution that companies in other industries have been taking advantage of for years.
If you are a health care provider and have unpaid invoices to Medicare, Medicaid, or insurance companies, we can help you improve your cash flow position. You can receive cash within 24-48 hours of claim submissions! Call 877-909-3111 today!