Although the healthcare industry is worth over 4 trillion dollars, all of that money does not come in at once. Medical bills can take weeks to several months to be paid. Although slow-paying clients and patients are normal and expected, it can restrict cash flow and growth.

Healthcare financing, also known as medical factoring, creates a unique opportunity for businesses to receive payment on invoices that have not yet been paid by the client. This arrangement allows healthcare professionals to sell unpaid invoices to factoring agents or lenders and receive a cash advance of up to 80% with the rest being paid out (minus fees) upon client payment.

Funding the Industry

Every aspect of the healthcare industry requires funding from time to time. Healthcare financing works for everyone, both healthcare vendors and healthcare providers. Vendors are businesses that supply goods or services for the healthcare industry. These goods and services include anything from staffing to equipment and transportation. Healthcare providers are those who provide medical services (e.g., doctors, dentists, surgeons).

Healthcare financing helps healthcare professionals cover their ongoing operating expenses. As well as invest in equipment, sales, marketing, and new products. 

How It Works

Find a Factor

While the application process for factoring is easier and the approval rates are higher than traditional loans. Financial institutions are still going to review your company before agreeing to work with you. Factors will review your business and check your client’s credit and payment history before drafting a factoring agreement.

The factoring agreement will include the fees, payment plan, and the initial maximum credit line. 

Assign Invoices

Upon receiving the factoring agreement, the factor will choose the invoices they are willing to take on and provide between 75% and 90% of the total cost of the invoice. The invoice is then transferred to the factoring company for collection purposes.

Upon repayment, the factor sends you the remaining balance (10% to 25%), or reverse amount, minus all fees and rebate costs. You can submit and assign as many invoices as you would like as long as they do not exceed the maximum credit line. As clients and patients pay their invoices, the credit line replenishes. 

Is Healthcare Financing For You?

Factoring offers an easy application process, fast and high approval rates, and quick turnaround times. Approval can occur in hours and funding dispersed within twenty-four hours. While this form of healthcare financing may be more expensive than traditional loans. Factoring does provide flexibility comparable to lines of credit. Over time the factoring process can become seamless, allowing for the possibility to negotiate a lower factor rate or better repayment terms.

Factoring, regardless of the industry, requires a lending company that understands the ins and out and ups and downs of your industry and situation. Finding a financial institution that will work with you is very important. Contact Hornet Capital Solutions today to discuss how we can work with you on your financial goals.