Medical Receivables Factoring
Manufacturing, merchandising and retailing business are not the only ones exposed to credit which slows the business in terms of cash flows. Credit sales usually prevents continuous flow of cash by making the firm wait until they get paid from clients from 15 to 90 days credit term. These types of businesses are usually into product sale. However, there are also service industry that gets the same scenario particularly medical practitioners and hospital. That's when medical receivables factoring comes in handy. Medical receivables from insurance companies and government agencies can now be factored.
Healthcare providers such as doctors, medical practitioners and hospitals usually give bills to insurance companies or government agencies for the supplies or services they rendered from patients who is under these medical benefits. They usually wait until 30 to 90 days before these health providers pay their services or supplies. Medical factoring companies works just like any factoring business only that it gets the receivable from the medical practitioner or hospital and provides them the immediate cash they need usually at least 80% of the receivable and still gives back the remaining cash to the medical practitioner or hospitals after the health provider pays them in full. Of course the medical factoring companies will take the necessary charges, interests, and a percentage of the collectible. The benefit it brings is that the hospital or medical practitioners will be given immediate cash that they can readily use to meet payables or supplies payment for clinic utilities, immediate supplies needed, and salary for staff. Medical receivable factoring simply eliminates the payment wait from the insurance companies and give immediate cash. If these health care providers are paid by cash directly by the patient, they don't necessarily have resort to factoring since this are only good for those who is under insurance companies or government agencies that these health care providers bill.
Medical receivables factoring works by giving the bill to the factoring companies who will take responsibility in collecting the amount in the bill. The factor will be giving to the health care provider at least 80% cash of the invoice, depending on what the factoring company offers to the client. The factoring company waits until they get paid by the insurance or government agency and usually gives out a statement to the insurance or government agency that their payment should be given to the factoring company. Ones the bill is fully paid, the factoring company will give back the remaining amount of the bill to the health care provider less the charges, interest and percentage to be claimed.
There are many factoring companies offering a specialized services and attractive transaction to the health care providers. There are even those who offer 90% cash from the invoice and less or cheaper charges than the others. It is up to the health providers who they want to choose to handle their factoring business. What is sure is that they get the immediate cash they need for regular service operation.
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