How Invoice Factoring Works

Running a healthcare business comes with a unique set of financial challenges—especially when payments from hospitals, nursing homes, or insurance companies take 30, 60, or even 90 days to arrive. While your expenses continue daily—payroll, supplies, and operating costs—your cash flow can quickly tighten. This is where invoice factoring can make all the difference.

Invoice factoring gives your business the ability to turn unpaid invoices into immediate working capital, helping you maintain steady cash flow and focus on growth rather than collections.

Invoice Factoring vs. Traditional Financing

Unlike traditional bank loans, invoice factoring doesn’t require collateral, long approval processes, or strong credit history. Instead, it’s based on the creditworthiness of your customers. This makes factoring a faster, more flexible funding option for healthcare agencies and other service-based businesses that experience delayed payments.

While loans add debt to your balance sheet, factoring simply converts your accounts receivable into cash—helping you access the funds you’ve already earned, without taking on additional financial risk.

Qualification Criteria for Factoring

Not every business may qualify for a loan, but most service providers that invoice other businesses are eligible for factoring. Typically, companies that:

• Provide services to other businesses (B2B)
• Have invoices due within 90 days
• Work with creditworthy clients
• Can demonstrate consistent invoicing and payment history

For healthcare businesses, this includes home healthcare agencies, medical staffing companies, and private duty care providers who bill facilities, insurers, or vendors.

The Step-by-Step Factoring Process

Factoring is straightforward and designed to provide fast access to cash:

1. Apply with a factoring company. Submit your business and client details for review.
2. Sign a factoring agreement. Terms include the advance rate, fees, and collection details.
3. Submit invoices for funding. Send unpaid invoices to the factoring company.
4. Receive your cash advance. Get up to 80–90% of the invoice value within 24–48 hours.
5. Factoring company collects payment. The factor handles collections directly from your client.
6. Receive the remaining balance. Once payment is received, you get the rest—minus the factoring fee.

This process can be repeated as often as needed, making it a consistent source of cash flow for growing healthcare businesses.

Benefits of Invoice Factoring

• Immediate access to working capital: No more waiting weeks for payments.
• No new debt: Factoring uses your existing invoices to generate cash.
• Outsourced collections: Save time and administrative costs.
• Improved financial stability: Cover payroll, rent, and operating expenses on time.
• Scalable with growth: As your business grows, your available funding grows too.

Industries That Benefit from Factoring

While many industries use factoring, healthcare providers benefit the most due to slow-paying clients and long reimbursement cycles. PRN Funding partners with:

• Home healthcare agencies
• Medical staffing companies
• Private duty and nursing care providers
• Medical supply and service vendors

By turning outstanding invoices into working capital, these businesses can continue providing quality care without financial interruptions.

Common Concerns & Misconceptions

Some business owners worry about how factoring might affect client relationships or costs. The truth is that factoring is a transparent and professional process—your clients simply pay the factoring company directly. Costs are competitive and often lower than the long-term expense of carrying debt or missing payroll.

Reputable factoring companies, like PRN Funding, communicate clearly with clients and ensure that the funding process strengthens—not disrupts—business relationships.

How PRN Funding Does It Differently

PRN Funding specializes exclusively in healthcare factoring, offering tailored solutions for agencies that bill medical facilities and insurance companies. With more than 25 years of experience, we understand the unique financial challenges of the healthcare industry.

Here’s how PRN Funding stands out:

• Fast funding turnaround times
• No hidden fees or long-term contracts
• Experience with healthcare billing and vendor management systems (VMS)
• Personalized service from a dedicated funding team

Getting Started with PRN Funding

Starting the process is simple. To apply, businesses typically provide:

• A completed application
• Recent invoices and aging reports
• Client details and payment history

Once approved, you can receive funding in as little as 24 hours. PRN Funding’s team will guide you through each step, ensuring a smooth, transparent experience.