About the Medical Factoring Process

If you operate a healthcare facility or provide healthcare services and are in need of financing, medical factoring is a viable option.

Medical factoring is not a loan. If you’ve had difficulty meeting the strict bank lending requirements, medical factoring companies can help you get the funding you need to operate and grow your healthcare business.

Medical factoring can help your company battle cash flow shortages and helps your thrive in spite of slow-payment, third-party billing issues and periods of rapid growth.

First things first, PRN Funding does not factor medical receivables. However, by getting you in touch with Factor Finders, LLC, a leading factoring broker, we can help you find the top medical factoring companies to meet your cash flow needs. Contact PRN Funding at 216.504.1000 for more information.

Here’s how the medical factoring process works:

1. A medical provider submits invoices to a third-party payer.
2. The medical provider sends copies of the invoices to the factor.
3. The medical factor buys the provider’s invoices and advances up to 80 percent of the expected collectable value. Funds are usually available within 24 hours.
4. The factoring company holds the remaining percent until payment is received. Once paid, the reserve is released back to the medical provider minus a small factoring fee.

Will invoice factoring services look bad to my customers?

Using invoice factoring services does not necessarily reflect negatively on your business in the eyes of your customers. Invoice factoring is a method of obtaining outside funding to support your business’s growth and operations. It should not be perceived as a negative aspect by your clients.

When you work with a factoring company, the impact on your customers is minimal. Instead of making payments directly to your business, your clients would write checks payable to the factoring company. The factoring company then handles the responsibility of informing your customers about this change in payment arrangement.

It’s important to note that the approval process for invoice factoring primarily depends on the creditworthiness of your business’s customers and not necessarily your business itself. So, as long as your customers have good credit records, they may see no difference in their experience while doing business with you.

By utilizing invoice factoring services, you are simply leveraging a financial tool to optimize your cash flow and support your business’s growth. It demonstrates your proactive approach to managing finances and ensuring smooth operations, which can be seen as a positive attribute by your customers.

What should I look for in a factoring company?

When evaluating different factoring companies, it is important to consider several key factors to ensure you make an informed decision. Here are some crucial aspects to look for:

• Fee Structure: Factoring is not free, and it is essential to understand the overall cost associated with the service. Pay attention to all the fees charged by the factoring company. This may include application costs, account setup fees, charges for researching any liens, fees for credit reports, and costs related to money transfers or last-minute funding. Compare the fee structures of different factoring companies to ensure they align with your financial goals and needs.
• Specialties: Each factoring company may have its own areas of expertise. Some may specialize in specific industries, such as manufacturing, transportation, or healthcare, while others may have more general capabilities. Consider the nature of your business and find a factoring company that has experience working with companies in your industry. Their familiarity with your specific needs and challenges can greatly benefit your partnership.
• Location: Factoring companies can be located locally or operate on a national or even international scale. Determine whether the location of the factoring company is important to you. Having a local factoring company might be advantageous due to the ease of communication and potentially more personalized service. On the other hand, a national or international factoring company may offer broader networks and resources.
• Transparency and Trust: It is vital to feel comfortable and trust the factoring company you choose to work with. Look for a company that demonstrates transparency in their operations and provides clear explanations of their processes and procedures. Ask for references or read reviews to gain insights into their reputation and reliability. A trustworthy factoring company will be open and honest, ensuring a mutually beneficial partnership.
• Additional Services: Some factoring companies offer value-added services beyond basic factoring, such as collections management, credit management, or risk assessment. Consider whether these additional services align with your business needs and if they can provide added value to your operations. A factoring company that offers comprehensive solutions can be more beneficial in the long run.

Check out our recent YouTube video to learn more about the process of factoring medical receivables.