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However, even though the growth trend looks good, running a medically related business keeps getting more and more challenging. In the past, doctors and medical suppliers could expect to get large and quick reimbursements for their services. Cash flow was reasonably easy to manage. 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 you should be prepared to wait longer to get paid.
This creates a financial perfect storm for medical industry companies. On one hand, you are getting paid less and waiting longer for your money. On the other hand, your operating expenses remain the same or perhaps are higher. You still need to pay your employees and your suppliers. In almost all cases, this limits your ability to pursue new opportunities and grow your business. In some cases, it may even threaten your ability to continue to operate your business.
Is there a way to fix the cash flow problem?
If your businesss main cash flow problem is not being able to afford to wait 30 to 90 days to get paid by insurance companies and Medicare, then factoring your invoices could be the right solution for you.
The factoring proposition is very simple. Factoring is a way of financing, in which a factoring company provides you with advance payments based on your outstanding accounts receivable (or invoices). You get funding as soon as you invoice. The factoring funds it and waits to get paid until the insurance companies or Medicare pay the invoices.
Factoring has advantages over loans and lines of credit. First, factoring financing lines do not have arbitrary limits. The maximum amount of monthly financing is solely determined by your ability to invoice. If your business grows, your financing grows automatically. Also, factoring companies dont require the same collateral that banks do, so new businesses or doctors offices can usually qualify easily.
Medical Factoring for Small Medical Offices Are you waiting up to 90 days to get paid by insurance carriers, HMOs and Medicare/Medicaid? Learn how to get financing with medical factoring.
As commercial lines of credit and business loans get harder and harder to qualify for, many medium and small medical practices and healthcare businesses are turning to medical factoring to help alleviate their slow cash flow. Although many medical practices can still qualify for a business loan or line of credit, many are finding that traditional banking products dont always solve their cash flow concerns in the long term. Why? Well, trad ..
How does factoring work?
The process is fairly simple. Once an agreement is established with a factoring company, it works as follows:
1. Your office submits your weekly (daily or monthly) billings to the insurance company and to Medicare/Medicaid. (note: sometimes this task can be handled by the factor on your behalf)
2. Your office sends a copy of the billings to the factoring company.
3. The factoring company advances you up to 85% of Net Collectables within 48 hours. Funds are sent by wire or direct deposit. The remaining 15% is called a reserve and used to settle billing discrepancies at time of payment. This is returned to you once the invoices are paid.
Your Rights Under The Fair Credit Billing Act If you have ever received your credit card statement and found an error, you know how frustrating it can be. You either call the credit card company and they say you need to talk to the merchant. You call the merchant and they tell you to call the credit card company. Eventually, you might just pay the charge to make the problem go away and keep from paying interest on a purchase you didnt make or one you returned. Today, the Fair Credit Billing Act makes sure that you dont have to pay for something you didnt buy. But the act also covers other billing errors that you should not have to be re ..
4. The factoring company waits to be paid by the insurance company or Medicare/Medicaid.
5. Once the factoring company is paid, they settle out the transaction and rebate you the remaining 15%, less their fee.
The advantage of factoring
Factoring is ideally suited for medical offices and testing centers that are growing quickly and cannot afford to wait the usual 30 to 90 days that it takes to be paid by insurance companies or Medicare. It can provide you with ongoing financing, streamline your cash flow, and most of all, relieve the stress of not knowing when youll be paid.
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About the Author:
Invoice Factoring Group Invoice Factoring Group (http://factoring.qlfs.com" target="_blank"> http://factoring.qlfs.com) can provide you with a free medical and doctor office factoring quote ( http://factoring.qlfs.com/html/medical_offices.html" target="_blank"> http://factoring.qlfs.com/html/medical_offices.html ). Marco Terry, the president, can be reached at (866) 730 1922.
Source: http://www.isnare.com Marco TerryHow To Finance Your Medical Office, Medical Supply Or Medical Testing Company
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