Small to midsize medical companies are helped – and burdened – by working with large healthcare corporations. While these big businesses supply steady work for the smaller companies, they often run on extended payment terms… something not all of their clients can easily manage to do.
That is where medical factoring comes in. By factoring your business’ invoices, your company can get paid on your terms instead of those set by the larger companies you work with.
Not sure if medical factoring is right for your business, hospital or medical institution? We’ve compiled some of the most common medical factoring questions (and answers) on this page to help you decide if factoring is right for your healthcare company.
Frequently Asked Medical Factoring Questions
Some of the most common medical factoring questions are centered around factoring basics. Here are some of the most frequent questions we get about medical factoring.
How can I use the funds from medical factoring?
Medical factoring is the process of selling your company’s unpaid invoices in exchange for upfront capital. Medical invoice factoring can also be referred to as accounts receivable financing.
How does medical factoring work?
Medical factoring works like this:
- Your company submits unpaid medical invoices for completed work.
- The factoring company your business works with verifies the invoices and advances you up to 90 percent of the funds within 24 hours.
- The factoring company collects payment from your customer(s) according to your business’ payment terms.
- When the factoring company receives the payment, they release the remainder of the invoice amount to you, minus a small factoring fee.
Does my company need to factor all of its invoices?
No, your company does not need to factor all of its invoices. You can factor as few or as many invoices as you want. Factoring can be stopped whenever you want or continued for as long as you want/need.
How can medical factoring help my business?
Medical factoring can help your business by assisting in normalizing cash flow. Businesses in the healthcare industry often face long payment terms from clients that don’t mesh with their company’s pay schedule.
Medical factoring is a simple financing solution perfect for growing companies since businesses can factor as many or as few invoices as they wish. Factoring also improves a business’s credit and many factoring companies offer back-office support to companies who request it.
Can hospitals factor?
Yes, hospitals can factor their invoices to other companies. Factoring is not possible if an invoice is billing a consumer.
Can nurse staffing companies factor?
Yes, nurse staffing companies – including those who work in travel nursing – can factor.
What sort of healthcare companies qualify for medical factoring?
We can work with a variety of different healthcare companies including:
- Medical Receivables
- Allied Health Staffing
- Medical Supplies
- Healthcare Staffing
- Medical Transcription
- Home Care
- Nurse Staffing
- Medical Billing
- Private Duty Care
- Medical Coding
- Private Practices
- … and more!
If you don’t see your specific industry listed here, don’t worry. There are many healthcare companies we work with that don’t necessarily fall under these categories. Give us a call, tell us about your company and we will be able to tell you immediately if we can help you!
Can my company factor if we work with Medicare or Medicaid?
Your company can factor if you work with Medicaid, but we cannot factor Medicare.
A different set of paperwork is needed to factor when dealing with Medicaid or government contracts. Your business will need the following:
- Current financial statements
- Federal tax returns from the previous two years
- Federal payroll tax filings and proof of payment from the previous two years
- Last month’s business bank statement
- A copy of Articles of Incorporation and By-Laws
- A voided copy of a check
- A current accounts receivable aging report
- State NPI and/or provider number(s) along with an online username/password to access historical payment and remittance data for each.
- Proof of Workman’s Compensation of Worker Insurance
- Proof of General Liability Insurance
- Copy of your agreement/contract with the state
- Copy of CEO/President’s Driver’s License.
You will also need to provide the following documents, which the factoring company will give you:
- An application
- Factoring and Security agreement
- Resolution of the Board of Directors
- Tax Information Authorization
- Validity Guarantee(s) – Notarized
- Letter of Notification of Factoring Company’s letterhead (for your files)
- Assignment of Accounts Receivable
Note: Certain states have different requirements when it comes to factoring government receivables. Please contact us if you are interested in factoring your Medicaid invoices.
What paperwork or information is needed to factor medical accounts receivables?
The following is paperwork/information needed for a business to factor corporate medical accounts receivables:
- Current financial statements.
- Federal tax returns from the previous two years
- Federal payroll tax filings and proof of payment from the previous two years
- Last month’s business bank statement
- A copy of Articles of Incorporation and By-Laws
- A voided copy of a check
- A current accounts receivable aging report
- A current accounts payable aging report
- Customer list with names and complete contact information
- Copies of invoices you wish to factor
- Proof of Workman’s Compensation of Worker Insurance
- Proof of General Liability Insurance
- Sample copies of standard contracts
- Picture copy of President’s Driver’s License
You will also need to provide the following documents, which the factoring company will give you:
- An application
- Factoring and Security agreement
- Resolution of the Board of Directors
- Tax Information Authorization
- Validity Guarantee(s) – Notarized
- Letter of Notification of Factoring Company’s letterhead (for your files)
- Assignment of Accounts Receivable
What sort of expenses can medical factoring help pay for?
Medical factoring can help pay for any business-related expenses, including:
- Utilities
- Payroll
- Rent
- Medical Equipment and Supplies
- Sales and/or Marketing Campaigns
- Office Improvements
- Healthcare Consultants
- …and much more!
Factoring is giving you your money, only faster. Use it as you would normally.
Can healthcare companies factor government contracts?
It depends. Some government contracts are able to be factored while others are not. The best way to ensure your government invoices are factoring is by speaking directly with the factoring company you are considering working with.
Will my customers know if my company decides to factor?
Yes, your customers will know your company factors. The factoring company will notify your clients. Don’t fret, receivables-based financing is used by many of the largest corporations in the world! The fact that your company qualifies for a factoring “credit line” is a strong positive statement to your client.
How quickly will my company receive money from factoring medical invoices?
Once your business is approved for factoring, you can receive cash in as little as 24 hours.
How much does medical factoring cost?
Factoring rates are different for each business looking to factor. Rates are based on several variables, including your client’s credit and payment record.
You can get a free, no-obligation factoring quote by either giving us a call at 216-504-1000 or by filling out an online form.
Where can I learn more about what factoring can do for my business, specifically?
You can learn more about how factoring can help your business in particular by speaking to one of our factoring experts. While it’s easy to infer the benefits factoring will have on your business, you can get more accurate predictions by talking to someone that knows the industry inside and out, like our factoring specialists.
Don’t worry, speaking with a member of our team doesn’t mean you are under any obligation to factor immediately.
What do I do if I want to start factoring?
If you’re interested in factoring, we’re here to help! Simply contact us to get started.
