There are a lot of rumors that factoring is not an ideal payroll funding solution for healthcare staffing business owners and entrepreneurs. However, many of those rumors are a result of misinformation and poor healthcare staffing factoring research methods. This article will help debunk some of the more common factoring myths so that healthcare staffing business owners can make an educated decision when it comes time to finding the appropriate funding solution for their cash flow problems.
Healthcare Staffing Factoring Myth #1
I’m nervous to factor my healthcare staffing invoices because my customers are not familiar with it.
Reality: Factoring has been around for over 4,000 years. In fact, many big name companies have benefited from it, including: 3M Corporation, Best Buy, American Express Company, Motorola Inc., CVS Corporation, and Foot Locker. In addition, factoring is very prominent in the world of healthcare staffing because medical facilities routinely take weeks or months to pay their healthcare staffing vendors. In most cases, in order for a healthcare staffing business owner to utilize a factoring firm, the accounts payable clerk who handles the payables just needs to change the remittance address.
Healthcare Staffing Factoring Myth #2
Healthcare Staffing Invoice Funding is an expensive financing option.
Reality: It’s important to consider the fact that a factoring fee is not the same thing as an annualized interest rate. For example, if a factoring firm charges a healthcare staffing agency owner 3% per month, it cannot simply be translated into 36% APR. Rather, a factoring firm’s fees stop the day an invoice is paid. Healthcare staffing firms do not typically wait 12 months to receive payment on an invoice, so the fee is not nearly as large as one would perceive it to be.
Healthcare Staffing Factoring Myth #3
Healthcare Staffing Factoring requires a long-term commitment.
Reality: Unlike a bank loan, most factoring companies who work with healthcare staffing agencies do not require a fixed-term financing commitment. You choose when, who, how much and how long to factor your invoices.
Healthcare Staffing Factoring Myth #4
With factoring, I will lose control over my accounts.
Reality: Selling healthcare staffing invoices makes it easy for business owners to manage their invoices. Most factoring firms offer their clients access to financial reports weekly or daily. In fact, there are many factors who grant access to a secure online reporting system where healthcare staffing entrepreneurs can review purchased accounts and collections in real time via a secure Internet connection.
Healthcare Staffing Factoring Myth #5
The hospitals and nursing homes will think my agency has cash flow problems.
Reality: There are many businesses who use factoring and many medical facilities are already familiar with healthcare staffing factoring. Once alerted of the change in remittance address, healthcare facilities simply view the factor as the agency’s new accounts receivable department.
Healthcare Staffing Factoring Myth #6
The hospitals and nursing homes where I staff will be bothered by frequent collection calls.
Reality: A factoring firm will initially contact an agency’s customer to verify that the invoices are valid. If there is a problem and the healthcare staffing factor cannot successfully collect on the invoices, the factor will contact the agency owner to discuss the issue.
Healthcare Staffing Factoring Myth #7
The healthcare staffing business model is too complicated for a factoring firm to understand.
Reality: There are many accounts receivable factoring firms that are familiar with this intricacies involved with the healthcare staffing industry. As a result of their industry expertise, these factoring firms have specialized funding programs specifically geared towards healthcare staffing agencies.
Certainly, reviewing these seven common myths will help healthcare staffing agency owners who are trying to piece together the facts about invoice factoring. Hopefully, this article has proven that there are two-sides to every story. You can learn more about managing factoring fears, all it takes is a little research to get started!