Medical factoring helps various businesses to have a stable situation and control on payments and bills. Medical factoring is mostly used by medical and healthcare companies in all branches. Medical funding specialists can ensure that any short term A/R (HMO/PPO/Etc) is under control, giving financial stability for the medical provide
How does it help?
Any Medical Provider should focus on sufficient cash flow needed to sustain normal business expenses such as payroll, equipment and others. Medical factoring companies can finance the A/R in order to generate capital, since insurance companies reimburse expenses after a long period. Selling the accounts receivable will guarantee an amount of money to cover some of the unpaid bills, ensuring that the cash flow is maintained. Since this process is handled by professionals it does not take too long to receive the financial support.The funds can vary between $5,000 and can go up to $5 million, depending on the factoring provider.
Funding Solutions companies ensure that legislation and regulatory requirements are met. At the same time, they guarantee understanding of the financial disadvantages when insurance companies pay for their clients. These professionals are up to date with the market and financing solutions, providing the best funding services to cover any unpaid bill. Workers Compensation Funding companies can rely on a medical factoring partner when a third party does not pay its bills on time. Usually, insurance claims take up to three months to be paid, which can create problems in cash flow for the medical or healthcare providers.
How it works?
After the patient filed in his insurance claim to cover any medical or healthcare expenses, the bills are issued and sent to the insurance company. It usually takes between one and three months for the claims to be processed and fully paid. Due to the fact that medical providers must have a stable cash flow, this period is too long for their on-going expenses. This is the stage when the medical factoring partner is engaged.
First, the service provider (healthcare or medical company) submits the claim with all details to the factoring partner. Then, 80% of the entire claim amount is funded to the service provider by the factoring company. In this way the cash flow is maintained at a stable condition until the claim is fully paid by the insurance company. After the claim has been fully paid, the factoring company pays the remaining 20%, from which it takes the financing fee as agreed in the contract. However, these amounts and fees depend on the company’s size, as well as the claim’s size.
The main advantage of choosing a funding source is that the cash flow is kept at its stability. In addition to this, unpaid bills can be mostly covered during the claim process. Furthermore, choosing a factoring agent will reduce time spent contacting the insurance company to pay its claims. It will also ensure to avoid any unpleasant phone calls or contacts between the medical service provider and the third party.Plus, a medical factoring company is always up to date with regulations and procedures. Overall, the major advantages are that there are multiple offers, exclusive financial sources for both institutional and private businesses. The documentation is simple and the funding can be provided on a single or continuous basis, while the offers are adapted to demand and needs.
Who can benefit of medical factoring?
Medical factoring can be used by any private or institutional business that works in the medical or healthcare industry. This includes hospitals and surgery facilities, healthcare clinics, staff agencies, nursing homes, doctor offices, rehab facilities, pharmacies and many others.
Everyone knows that keeping a stable cash flow may be hard if bills are not paid on time or in full. It is recommended to apply for various funding sources to cover the account receivables since insurance claims can take long to be paid it. In this way medical and healthcare providers don’t need to focus on receiving the money back since this can easily be done by a medical factoring provider.