Here’s How Factoring Can Help Your Company

PRN Funding‘s healthcare factoring services benefit small and medium-sized companies serving healthcare institutions in many ways. There are many factoring companies available, giving healthcare businesses a variety of options to choose from. Most healthcare companies use factoring to boost their cash flow and eliminate the wait to be paid. Invoice factoring can help healthcare providers improve cash flow, enabling them to invest in technology, staffing, and expansion for growth opportunities. However, PRN Funding offers more than just a stable source of working capital.

What is Invoice Factoring in the Healthcare Industry?

Invoice factoring in the healthcare industry is a financial solution that allows healthcare providers to sell their unpaid invoices to a factoring company in exchange for immediate cash. This process helps healthcare providers to improve their cash flow, reduce the risk of non-payment, and focus on providing quality patient care.

How does factoring work? The factoring process begins when a healthcare provider submits their outstanding invoices to a factoring company. By factoring invoices, the provider is converting outstanding invoices into immediate cash. The factoring company advances a portion of the invoice value and takes over the responsibility of collecting payments from customers. This is how factoring works: the factoring company manages the administrative steps, from invoice assessment to collection, allowing providers to access funds quickly and reduce the burden of collecting payments themselves.

Definition and Explanation of Invoice Factoring

Invoice factoring is a type of accounts receivable financing that involves selling outstanding invoices to a third-party factoring company. The factoring company advances a percentage of the invoice value to the healthcare provider, typically within 24-48 hours, and then collects the full amount from the patient or insurance company. The factoring company charges a factoring fee, which is usually a percentage of the invoice value, for their services.

Understanding Invoice Factoring Options

Invoice factoring options can vary depending on the factoring company and the specific needs of the healthcare provider. Two common types of invoice factoring are recourse and non-recourse factoring.

Types of Invoice Factoring: Recourse and Non-Recourse Factoring

Recourse factoring involves selling invoices to a factoring company, but the healthcare provider remains responsible for collecting payment from the patient or insurance company. If the patient or insurance company fails to pay, the healthcare provider is responsible for repaying the factoring company.

Non-recourse factoring, on the other hand, involves selling invoices to a factoring company, and the factoring company assumes the risk of non-payment. If the patient or insurance company fails to pay, the factoring company absorbs the loss, and the healthcare provider is not responsible for repaying the factoring company.

Non-recourse factoring can provide an added layer of protection for healthcare providers, as it eliminates the risk of non-payment. However, non-recourse factoring may come with higher factoring fees or more stringent requirements.

Invoice factoring can be a valuable financial solution for healthcare providers who experience cash flow challenges or have a high volume of outstanding invoices. By understanding the different types of invoice factoring options, healthcare providers can make informed decisions about which option best meets their needs.

Costs & Fees Associated with Invoice Factoring

When considering invoice factoring as a business financing solution, it’s important for healthcare providers to understand the costs involved. Factoring companies offer immediate cash by purchasing your outstanding invoices, but this service comes with various fees that can impact your overall cash flow.

The primary cost is the factoring fee, which is typically a percentage of the total invoice value. This fee compensates the factoring company for advancing funds and managing the collection process. The exact percentage can vary depending on the type of business, the creditworthiness of your customers, the size and volume of invoices, and the payment terms involved.

In addition to the standard factoring fee, some factoring companies may charge additional fees such as application fees, processing fees, or credit check fees. It’s essential to review the terms carefully to ensure there are no hidden fees that could affect your bottom line. Some companies may also have minimum volume requirements or charge extra for spot factoring, where only select invoices are factored.

The total cost of invoice factoring can also depend on how quickly your customers pay their invoices. If payment is delayed, the factoring company may charge additional fees for the extended period. Therefore, understanding your customers’ payment habits and the terms offered by different factoring companies can help you make the most cost-effective choice.

Before committing to a factoring agreement, compare offers from multiple factoring companies and ask for a clear breakdown of all fees. This transparency will help you accurately assess the invoice factoring cost and ensure that the benefits—such as improved cash flow and immediate access to working capital—outweigh the expenses. By being informed, healthcare businesses can leverage invoice factoring to bridge cash flow gaps and support ongoing business growth without unexpected financial constraints.

A Simple Financing Solution

• Immediate cash — We advance you cash on your qualified receivables in less than 24 hours.
• Factoring is fast and simple — One of the benefits of healthcare factoring is that the application process is a cinch. We require no history of profitability, no tax returns, personal financial statements, business plans or personal guarantees. So after initial approvals, you can be on your way to factoring in as little as 24 hours.
• No long-term obligation — There’s no long-term contract to sign. And once approved, you can stop or start factoring at any time.
• Flexibility — You have the freedom to factor when you want, how you want, whom you want, and for however long you want.
• Unlimited capital — Another benefit of healthcare factoring: it can grow with your sales. As sales increase, more money becomes immediately available to you.
• Industry expertise — PRN Funding, LLC works exclusively within the healthcare industry. If you sell to and collect from providers of medical care (physicians, ambulatory care centers, nursing homes or hospitals) there is nobody better than us!
• Leverage off of your customers’ credit — Approval is easy. You don’t need good credit or a long-term operating history for factoring services; all you need is creditworthy customers.