Starting up a home health care agency is difficult when your agency lacks ongoing funding. For even an established home health care agency, waiting for payments from state agencies such as Medicaid can cause your home health care business to miss important payment deadlines for obligations such as payroll and taxes. Most businesses need some sort of platform to maintain or grow the company – this is where home health care factoring comes into play.
Home health care factoring can help a company both immediately improve its financial situation and prepare for continued success in the future on a few different levels:
Home Health Care Factoring and Cash Flow
Through home health care factoring, your accounts receivables are purchased so that you can meet payroll deadlines, taxes, and vendor invoices. Your company will benefit because:
- Small business that apply for bank financing are too often turned down by large banks, so applying for such loans can hinder the process of obtaining cash if you spend time waiting for an approval, only to be denied funds.
- Credit unions, community development financial institutions (CDFIs), micro-lenders, and accounts receivable factoring firms are much more likely to approve small businesses for financing.
- Once a business confirms the completion of home health care services, funds can be transferred to an account within hours.
Home Health Care Factoring and Billing and Collections
The expertise a home health care factoring agency can provide is valuable when you are strapped for time and manpower, as many small businesses are. These agencies have designed programs to meet the specific needs and overcome roadblocks typically seen in the industry, such as billing Medicaid after staffing personnel in a patient’s home.
Your billing and collections department will typically receive assistance with these services from the factoring agency, since the agency is just as invested as you are in your customer’s ability to pay.
Home Health Care Factoring and Operating Costs
Managing collections for your business involves the added cost and work required to post invoices, deposit checks, enter payments, produce reports, and follow-up on past-due invoices. A home health care factoring agency will provide these services for your business, so these resources can be put to good use elsewhere in your company.
Home Health Care Factoring and Credit
A home health care factoring company will complete some credit research on you and your business, but those results do not usually disqualify you for home health care factoring – your customer’s track record holds more weight.
The home health care factoring process can keep a company free of debt in two ways:
- By helping the company pay bills on time and allowing the business to avoid taking out an interest-accruing loan. When your payroll, overhead, and other obligations are paid on time, a company is in a position to rehabilitate or build its credit.
- When a home health care agency builds positive credit, it ultimately allows the business more financial options for the future.
Home Health Care Factoring and Financial Planning
Home health care factoring allows your business to ensure that it will have enough funds to cover immediate needs, freeing up the time, energy, and resources needed to plan for the future. Factoring companies are generally much more flexible than other types of funding companies about the length of your factoring commitment.
Accumulating a positive and solid credit history through factoring will open more doors for a company in the long-term, such as making it eligible for low-interest loans. Home health care factoring also places an agency in the position to take advantage of early payment discounts.
