Like all other businesses, medical facilities can struggle with the question of liquidity. In fact, because of patients relying on insurance to pay more and more of their medical bills, medical facilities face increasing challenges. The good news is that medical factoring can help.
What Is Medical Factoring?
Simply put, medical factoring is no different from any other form of invoice factoring. It is simply a way for your facility to receive instant capital based on your existing invoices. This applies to physician offices, medical practices, imaging facilities, long-term care facilities, and more. Working with a factoring company, you sell your accounts receivable invoices at a discount in exchange for immediate funds.
Recourse and Nonrecourse Factoring
When it comes to medical factoring, there are two types in use. Recourse factoring is a situation in which you, the seller, agree to purchase back any portion of the invoice that is not paid by the insurance company or the patient from the buyer (the factoring company). In nonrecourse medical factoring, the buyer (factoring company) takes the full risk of the invoice not being paid. Recourse factoring usually comes with a larger advance than nonrecourse factoring, but there is more risk.
The medical factoring process is relatively straightforward. First, invoices must be generated – this is the process of adding the factor’s information to the invoice, as well as supporting documentation. Those invoices must then be verified by the factor, and then the money is advanced to the medical facility. Notice is delivered to the debtor listed on the invoice, and reports are sent to your facility throughout the entire process.
Interested in enjoying the benefits of improved liquidity within your medical facility or office? Contact Grecco Capital for more information about medical factoring.