Factoring – How Medical Billing Companies Can Avoid the Double Credit Crunch

Medical Factoring CompaniesIn this economy, many service-oriented small businesses are struggling to obtain cash on two fronts – (1) Acquiring or extending a line of credit and (2) Getting their customers to pay in a timely manner.

Outsourced medical billing providers are just one type of business that is being affected by the “double credit crunch.” On the one hand, banks have tightened up on their lending criteria, and most are slashing credit lines instead of extending them, which means the likelihood of a medical billing provider securing bank funding is slim-to-none. On the other hand, even though an outsourced company’s main job is to bill insurance companies correctly so physicians (their customers) get paid quicker, those same physicians are oftentimes notorious for stretching out their payables.

Fortunately, there is an alternative financing option that can help speed up the payables process.

PRN Healthcare Factoring

 

Medical billing accounts receivable factoring is the conversion of receivables into cash by selling outstanding invoices to a factor. A viable option for medical billing companies in the early stages of business development and /or during rapid growth, accounts receivable factoring is a financial solution that gives medical billers immediate cash to manage operations more efficiently. Here are some additional key concepts about this practical financing alternative.

Medical Billing Accounts Receivable Factoring is:

  • A way to fill the gap between when your company provides outsourced billing services and when the physicians pay. Simply put, medical billing invoice factoring can turn weeks into hours or days.
  • Based on your customers’ credit history, not yours. If your company is providing billing services to a creditworthy physician’s office or medical facility, then your business is a good candidate for accounts receivable factoring.
  • A simple, fast method to sustain your “business as usual” relationship with your customers. Your company can continue to provide medical billing services to your customers with a set-term payment; but with accounts receivable factoring, you no longer have to wait to be paid. By working with a factoring firm, your company can easily obtain cash advances of 80% of the invoiced amount. Cash can be obtained within hours and as often as needed.
  • One of the oldest methods of providing working capital. Dating back 4,000 years, receivables factoring has long been used as a feasible and easy way for businesses to obtain cash flow in order to cover expenses while experiencing growth.
  • A chance to obtain cash without providing personal collateral or increasing interest expense. Invoice factoring is not a loan and does not “muddy up” your medical billing company’s balance sheet. You do not accrue interest or penalties. The medical billing factoring fee is clear and objective; it is based on the size of the invoice, the length of time it takes to collect the payment, and the creditworthiness of your customers.
  • An opportunity to build your outsourced medical billing company’s credit: With adequate cash flow, you can use money from accounts receivable factoring to clean up your debts as well as pay overhead, salaries and invoices. This will improve your credit history and make it easier to obtain credit from vendors and other financial institutions in the future.

By working with an accounts receivable factoring company, your company’s cash flow problems can be solved. In most cases, a medical billing company can receive the majority of what’s owed to them within hours of selling their invoices to a factor. Factoring for your medical billing company will help you avoid falling prey to today’s “double credit crunch” that so many other small businesses are enduring as a result of the current economic climate.

Factoring PRN Funding Phil CohenPhilip Cohen is the founder and president of PRN Funding, LLC, which is an extraordinarily focused niche player in the medical billing accounts receivable funding market place. Through a process known as factoring, PRN Funding provides healthcare service business owners with the financial resources needed to grow and effectively compete in the industry. With no minimums or fixed terms, PRN Funding ( http://www.prnfunding.com ) provides health service providers with flexible and immediate access to capital.

Article reprinted with permission by PRN Funding, LLC.

 

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