In the medical industry, both expenses and revenues per sale are large. The significant amounts of money that need to change hands can make the field challenging for businesses. It is common for cash flow demands to cause smaller practices to struggle. Invoice factoring may be the solution that your business needs to stay solvent.
The Trouble With Slow Payments
When you bill customers, do they take a while to settle the balance? Do some of them never pay? This uncertainty and delay can cause major cash flow problems. You’ve done the work and used up supplies and employee time. However, you haven’t been paid yet.
Most medical providers understand that healthcare can be expensive and is frequently not optional. However, this understanding does nothing to allay the cash flow strains of slow payments.
Simply put, healthcare practices can find themselves without enough cash to meet expenses due to slow payments and non-payments. Fortunately, there is a solution to this.
How Factoring Works
When you factor in your accounts receivable, you receive an upfront payment for the balance owed. This is at a slight discount over the full balance. However, it is money that you can invest right now in your business’s success.
The factoring company then collects the balance from your customers. Some arrangements have recourse if the customer doesn’t pay within a certain amount of time. Others are non-recourse agreements that do not have such a penalty. In either case, factoring companies are often more effective at collecting the balance owed promptly.
The Benefits of Factoring
The main reason that factoring can help your business is that it stabilizes your cash flow. In other words, you can be confident that you will have the working capital necessary to handle your expenses. Furthermore, you can take on new customers without having to worry about delayed payments.
The money that you have today is worth more than the money you will receive in the future. You can make investments and expand your business. Therefore, factoring often makes sense for medical practices, especially those that are worried about uncollected balances.
Discover more about accounts receivable factoring in the medical industry. This could be the solution you need to protect your business’s interests now and into the future. Stop stressing about collecting from your customers and start investing in your success. Contact us today and see if this is the right option for your practice.