Margie established an outpatient surgery center eight months ago using her personal savings. The entrepreneur’s main clients include commercial insurance companies who play slowly on 90 to 120 day terms. She also collects from Medicare/Medicaid on 60 day terms.
Margie’s center began to expand rapidly during her third month in business and ever since she has been scrambling to keep enough operating capital on hand to continue daily operations.
Factor Finders met with Margie to discuss financing options and introduced her to the medical receivables factoring process. She was interested in applying for medical receivables factoring because it could yield an unlimited credit line based on the creditworthiness of her customers. Margie qualified for medical receivables factoring and received her initial funding within five days. Now, as she gains more eligible receivables, they will boost her credit line.
The Medical Receivables Factoring Process is Fast and Efficient
Factor Finders varies its qualifying criteria by industry. The first step in the medical receivables factoring process always includes assessing the net realized value (NRV) of a potential client’s invoices. This assessment establishes a funding base and advance rate. Please note that the following types of receivables cannot be considered for medical receivables factoring:
- Private co-pay receivables
- Contractual reserves
- Receivables past 180 days
Secondly, Factor Finders conducts a third party analysis and compliance review. It is important to determine if the receivables have already been pledged to another lender or if there are any other issues that will put the factoring company or client at risk. During this process, Factor Finders will verify:
- Current licensing
- A review of current surveys
- Frequency of payment for each payer class
Lastly, Factor Finders will consider an organization’s financial statements purely to examine profitability. Balance sheets, tax returns and P/Ls are less important than eligible receivables and the financial strength of customers. Remember that financial statements typically do not stop a factor from funding the client.
Medical receivables factoring is an ideal solution for fostering healthcare providers’ growth. This financial backing is much needed in the healthcare industry to generate steady cash flow during slow payment cycles.
Call us at 1-855-FACTOR-1 to learn more about our medical receivables factoring process, or request a proposal online.