Healthcare factoring allows medical staffing firms to convert unpaid invoices into immediate working capital. This 7-step guide shows you exactly how to qualify for healthcare factoring, usually in less than a week. Whether you manage a nurse registry, therapy staffing agency, or travel nurse firm, these steps help you meet lender criteria and accelerate funding approval.
Before You Begin: Factoring Eligibility Checklist
Before applying, make sure your firm meets these baseline requirements:
- You invoice commercial healthcare facilities (not individuals).
- Your clients have good credit or established payment histories.
- Invoices are 30–90 days outstanding (no disputes).
- Minimum monthly invoice total: $25,000+ (typical for staffing firms).
- Business entity is legally registered with EIN and business bank account.
Step 1: Confirm You Work with Creditworthy Clients
Factoring companies primarily evaluate your customers’ credit, not yours. Healthcare facilities such as hospitals, clinics, and long-term care centers must demonstrate consistent payment histories.
How to verify:
- Request trade references from your clients.
- Use credit services or your factoring partner’s database.
Why it matters:
Strong client credit minimizes risk for the factor, increasing your likelihood of approval and potentially improving advance rates (often 85–90% of invoice value).
Step 2: Verify You Invoice Commercial Healthcare Facilities
Healthcare factoring applies only to B2B or B2G invoices—for example, billing hospitals, nursing homes, or government health systems. Invoices to individuals or patients do not qualify.
You’ll know this step is complete when your invoices clearly show the business entity and payment terms (net 30, net 60, etc.).
According to the International Factoring Association (2025), over 70% of approved medical factoring clients invoice hospitals or skilled nursing facilities.
Step 3: Ensure Invoices Are Free from Liens or UCC Filings
Factoring requires that invoices are unencumbered—meaning no other lender has a legal claim against them.
Check your UCC status:
- Search your state’s UCC filing database.
- Remove or subordinate existing liens before applying.
Why it matters:
If another lender already filed a blanket lien, the factor cannot legally purchase your receivables until the lien is released or modified.
Step 4: Gather Required Documentation
Factoring approval depends on accurate documentation that verifies your revenue and client relationships.
Typical documents include:
- Articles of Incorporation or business registration.
- Accounts Receivable (A/R) aging report.
- Sample invoices and client list.
- Copy of current contracts with healthcare facilities.
- Proof of business insurance (where applicable).
You’ll know this step worked when your factoring provider confirms receipt and no additional verification is needed.
Step 5: Demonstrate Consistent Billing & Collections
Factoring companies prefer agencies that bill regularly and maintain clean accounts receivable practices.
Best practices:
- Bill clients promptly each week or biweekly.
- Keep accurate time logs for placed nurses or therapists.
- Follow up professionally on overdue accounts.
If your records show stable billing cycles and minimal disputes, you’re positioned for fast approval—typically within 3–5 business days, according to PRN Funding’s 2025 averages.
Step 6: Select the Right Factoring Partner
Not all factors specialize in healthcare staffing. Choose one familiar with Medicaid/Medicare payor structures, vendor portals, and compliance requirements.
Look for partners that:
- Offer non-recourse options for medical receivables.
- Provide online portals for funding requests.
- Maintain transparent fee structures (1–4% average discount rate).
PRN Funding focuses exclusively on healthcare and staffing factoring—ensuring faster underwriting and accurate invoice verification.
Step 7: Complete Due Diligence and Agreement Review
Before signing, review all contract terms carefully. Focus on:
- Advance rate and reserve percentage.
- Fee structure (flat vs. tiered).
- Termination clause and minimum volume requirements.
Pro Tip: Ask your factoring company to walk through a sample funding transaction before signing. You’ll know you’re fully qualified once both the factoring agreement and Notice of Assignment are executed.
Common Issues & Solutions
| Problem | Cause | Solution |
| Application delayed | Missing client info | Submit complete client list with tax IDs |
| Rejected invoices | Patient billing instead of facility billing | Limit submissions to commercial invoices |
| Lower advance rate | Weak client credit | Provide updated A/R aging or add stronger accounts |
| UCC conflict | Prior loan lien | Request lien release or subordination agreement |
What Are the Next Steps?
Once approved, your first funding can occur within 24–48 hours of invoice submission. Going forward:
- Maintain up-to-date client records.
- Reconcile A/R aging monthly.
- Notify your factor of new clients in advance.
For healthcare staffing firms, qualifying for factoring isn’t just about paperwork—it’s about showing stability, professionalism, and solid client relationships. Following these 7 steps ensures you’re ready to unlock reliable cash flow support in 2025 and beyond.
