Introduction
Medical transcription services play a vital role in the healthcare industry, providing accurate and timely documentation of patient records. With the increasing demand for high-quality patient care, healthcare providers are turning to medical transcription services to improve their documentation processes. In this article, we will explore the benefits of medical transcription services, how they can improve cash flow, and what to consider when choosing the right medical transcription service.
Benefits of Medical Transcription Services
Medical transcription services offer numerous benefits to healthcare providers, including improved patient satisfaction, increased efficiency, and enhanced revenue cycle management. By outsourcing medical transcription, healthcare providers can reduce their administrative burden and focus on providing high-quality patient care. Medical transcription services can also improve cash flow by reducing the time spent on documentation and increasing the accuracy of billing and coding.
Improving Cash Flow with Medical Transcription Services
Medical transcription services can significantly improve cash flow for healthcare providers. By outsourcing medical transcription, healthcare providers can reduce their administrative costs and increase their revenue. Medical transcription services can also help healthcare providers to improve their billing process, reducing the time spent on claims and increasing the accuracy of payments. Additionally, medical transcription services can help healthcare providers to improve their revenue cycle management, reducing the risk of denied claims and increasing the speed of payment.
Choosing the Right Medical Transcription Service
Choosing the right medical transcription service is crucial for healthcare providers. When selecting a medical transcription service, healthcare providers should consider factors such as accuracy, turnaround time, and customer service. They should also look for a medical transcription service that is HIPAA-compliant and has experience working with healthcare providers. Additionally, healthcare providers should consider the technology used by the medical transcription service, including speech recognition software and electronic health records (EHRs) integration.
Length of Factoring Contract
When looking for a medical transcription funding company, also consider the length of time that you are required to remain in the factoring relationship. Some factors are more accommodating in this area than others, providing you the flexibility to choose how long you want to factor. Still, other factoring companies will require you to sign a term-contract for 12-24 months. If this is the case, the factor will also charge an early termination fee if the contract is broken before the term expires. Every company enters the funding equation at a different point. For example, where one business may only need to factor for a few months to get them through a small cash flow jam, another company may use factoring for years. So it’s important that you take the time to think through how long you plan to factor your receivables, and be sure to consider the type of commitment you are comfortable making. Having an estimated length of time in mind will make it easier for you to find a medical transcription factoring company whose terms are conducive to your business’ needs.
Also included in the contract will be details on the type of guaranty that the factor will require before funding your invoices. Although there are a few factors that will not require a guaranty, the majority of them will want either a personal guaranty, whereby the seller is personally responsible for any unpaid invoices, or a validity guaranty, in which the seller guarantees that all of the invoices that are sold to the factor are valid, were prepared after services were rendered, and that the customer has agreed to pay them.
How Soon to Get Funding
Finally, it’s necessary for you to understand what the invoicing process will be like after you have chosen your factoring company. A question that is heard frequently is “How soon can I be funded?” The answer to this question can vary from days to weeks or perhaps months. In order to set up a company for its initial funding, a factor requires you to fill out and return legal paperwork, including an application, contract, and a tax information form. In addition, you may be required to send in a current accounts aging report, federal tax returns, copy of your trade name certificate or fictitious name filing, articles of incorporation and bylaws, customer lists, copies of invoices, copies of driver’s license, a copy of a voided check, etc.
Because there are legal documents involved and liens have to be filed on your medical transcription receivables, the factor can usually move as quickly as the completed paperwork is received. In most cases, 5-7 business days is the average amount of time it will take to receive your initial funding. From there on, the funding process will most likely speed up to 2-3 business days after you present invoices to the factor.
There are some factors that can deliver same-day funds via a wire transaction, but just be aware of the fact that there will be fees associated with the amount of time it takes for you to receive funds into your account. For example, a same-day wire transaction will often cost you more than an overnight ACH transaction.
Reserve Accounts
Another topic involved with the entire funding process is what’s known as the “reserve account.” Reserve is the percentage of an invoice amount that the factor will hold onto until it receives payment from your customers. This reserve amount will eventually be released back to you once your invoices have been paid and the factor has collected its fees. For example, let’s say that you have an 80 percent advance rate and 20 percent is held for reserve. Let’s also say that your invoices were paid within 30 days, translating into a three percent discount fee. The initial 20 percent minus the three percent discount fee equals 17 percent, which is due back to you. Some factors will have automatic reserve releases weekly, some every other week or some monthly. Then there are some factors who will not release the reserve unless it is specifically requested by their client. Finding out when your reserve will be released back to you is an excellent question to ask a factor because it determines how soon you can have access to additional money to invest back into your business.
Billing, Collections, and Payroll
You also want to consider whether or not you want a factor to handle all of your back office services including billing, collections, issuing payroll, etc. Some factors will do a portion of the back office services and some will only act as a funder. Just remember that if you choose a factor that is willing to do all of your back office services in addition to funding, there will most likely be extra fees associated with the extra work. You may prefer to hand the entire billing and collecting process over to a factor so that you can focus your efforts on other areas of growing your business. Or you might want to work with a factor that will process and mail your invoices in addition to collecting while you continue to run the company’s payroll in-house. Perhaps, you would feel the most in control if you continue to invoice and collect and do your own payroll in-house. Whichever you choose, there will be a factor out there that is with the best fit for you.
Finally, the last thing that you should look for when choosing a factor is if you have access to financial reports concerning your clients’ payments. Most factors keep a detailed account of your customers’ payments. Just because the factor runs these reports for his/her own knowledge does not necessarily mean that they will share them with you. Some factors will provide you with weekly/monthly reports via e-mail or snail mail, and some factors can provide you with real-time reporting.
This means that as soon as a payment is posted to your account, you can view it online and see the same screen that the factor sees. Having access to these reports is a good way for you to learn more about your customers.
For example, if you notice that one of your client’s invoices is approaching 60 days, and you don’t want to have to pay the fees for those extra days, you could call that client and try to get the invoice paid sooner. Or if your factoring company handles your collections, you could also call them up and request that they work their collections on that particular account harder. Whichever way you choose to address the situation is completely up to you, but also keep in mind that having the option to view the reports in the first place is an important one.
In its entirety, these articles have addressed multiple ways to help you find the right factor for your business. Like I stated at the beginning of this series, there are thousands of factors out there, each with their own advantages and disadvantages. So it’s extremely important to look at the all-encompassing package of what each factor has to offer before you make your final decision. The best thing to do is to ask questions and listen for the answers that will best suit your medical transcription invoice factoring needs.