How Medical Practices Can Use Accounts Receivable Financing
Businesses in the medical industry often face uneven cash flow due to delayed payments on claims from insurance carriers. The time and attention needed to handle this difficulty can be a diversion from the essential tasks in caring for their patients. One answer to this dilemma is accounts receivable financing. Here are some suggestions on how medical practices can use this form of funding to boost cash flow and increase the efficacy of their businesses.
Accounts Receivable Financing Basics
After your practice has provided medical services to your patients, you bill the patient’s insurance company. Accounts receivable financing involves the selling of your accounts receivables in the form of your unpaid insurance claims to a financing company. This method of funding is available to hospitals, surgery centers, nursing homes, ambulance providers, medical laboratories, and other professionals in the medical industry.
How Accounts Receivable Financing Works
Once your application for accounts receivable financing is approved, you forward your unpaid invoices to the financing company. In turn, you receive an advance of 80 to 95 percent of the value of the accounts receivables. After these bills have been paid, you are sent the balance of the payments after the financing company subtracts its fee.
Benefits of Accounts Receivable Financing
When you utilize accounts receivable financing, instead of waiting 30 to 60 days for the funds you need to run your medical practice, you receive them within a day or two. The strong cash flow enables you to grow your business and recruit and train additional staff. With cash in hand you can also negotiate with suppliers for better terms. Because this form of financing is an advance rather than a loan, your business’s credit score is not affected. Since the financing company assists with collections, your billing and collection process also increases in efficiency.
For more advice on accounts receivable financing for the medical industry, get in touch with DrawBridge Capital.