Why Medical Practices Use Invoice Factoring to Increase Cash Flow
One of the most challenges aspects of running any business is maintaining profitability and having a steady flow of cash throughout your organization. Sometimes, even healthy businesses struggle collecting on accounts and having the cash they need to conduct their regular day-to-day affairs. Medical practices are not immune to these challenges, but wise offices turn to invoice factoring to help get them through tough financial times. This method of financing can help you improve cash flow even if your accounts receivable isn’t where you want it to be.
Sell the Accounts Receivable
Invoice factoring is a creative way to get more cash into your business and remove the stress of unpaid invoices from your accounts. In factoring, you sell your accounts to a third party at a discounted rate. The entity to which you sell the accounts, known as the factor, will pay you a certain percentage of the total amount of your receivables. You then get immediate cash from the factor and repay the entity.
Available Cash to Pay for Immediate Needs
Because the cash comes to you so quickly (often in as few as five days), you can use to it to pay for some of the pressing needs in your business, including other debts or improvements to your office.
Eliminate the Stress of Nonpaying Patients
In your practice, invoice factoring can be an excellent way to help take the burden off your back of having to continually call patients to pay up. Inevitably, there are always those who fail to or whom you can’t even get a hold of to try to collect on invoices. When you use factoring, you no longer have to worry about this sometimes-troubling task because it now becomes the responsibility of the company to whom you sold the accounts.
Spend Time Elsewhere
Medical offices like yours love invoice factoring because it eliminates the need to spend countless hours trying to collect. With this task now a thing of the past, you can devote our time and efforts on other important projects or processes. You now don’t need to pay for people to handle this duty, and you can reallocate positions to more important pursuits.
Your Credit is Poor
If your practice has credit on the lower end of the scale, don’t worry. Factoring doesn’t require a credit check, so you can use this method to help with your finances even if you’ve had credit issues that would prevent you from obtaining traditional financing.