Should Your Medical Equipment Company Factor Its Invoices?

Securing a line of credit in today’s economy is still a difficult task for most start-up companies and small businesses. Specifically, medical equipment companies that sell to physicians’ offices, medical clinics and other healthcare facilities are struggling to qualify for traditional financing. However, there is a reliable financing option available to medical equipment companies-accounts receivable funding. Not sure if your company would benefit from medical equipment factoring? Ask yourself the following questions to find out…

1. Do you have a profitable medical equipment business that is sometimes short on cash?  If you answered yes, then selling your medical equipment invoices to a factoring firm is definitely an alternative financing option you should consider. In short, medical equipment funding companies specialize in filling cash flow gaps. Specifically, invoice funding companies provide a steady stream of cash flow coming into your business. Therefore, you won’t have to worry about having enough cash on hand to meet day-to-day payment obligations.
2. Do you provide medical equipment to creditworthy customers, but they require you to wait 30, 60 or even 90 days for payment?  If you answered yes, then using a medical equipment funding company would definitely benefit your business. Oftentimes, healthcare providers (physicians’ offices, medical clinics, hospitals and/or nursing homes, etc.) have to wait months to be reimbursed by third-party insurance companies. In an effort to help manage their own cash flow a little better, healthcare providers oftentimes stretch out their payables to their vendors (i.e. medical equipment companies). When you factor your medical equipment receivables, the funder advances cash within 24-48 hours after you issue an invoice, so you no longer have to wait weeks or months for your customers to pay you.
3. Are you spending too much time tracking and collecting your medical equipment accounts receivable?  If you answered yes, then you should consider utilizing an invoice funding company because the account managers at a medical equipment factoring firm will monitor your invoices and collectables for you. Allowing a funding company to manage your invoices frees up your time to focus on what’s important-The day-to-day management and growth of your medical equipment business.
4. Have you recently missed a growth opportunity because your cash was tied up?  If you ever had to turn down a new customer because you didn’t have enough cash on hand to pre-order medical equipment and/or products for a new customer, then once again, you should consider using a medical equipment invoice funding company. As long as your business is generating new and valid invoices, the factoring firm will continue to advance you cash on those invoices. With a constant stream of cash always coming into the business, you will no longer have to pass up on new business opportunities.
5. Are your receivables available to be collateralized?  When looking for any kind of financing, it’s important that your receivables are not already pledged as collateral for another line of credit. If another funding source has already placed a lien on your medical equipment company’s receivables, then it’s as if they already own the rights to your invoices. In other words, if another funder already owns your company’s invoices, then a new factoring firm cannot buy them.

In conclusion, if you are a medical equipment business owner who is considering alternative forms of financing, and you answered yes to any of the above questions, then you should strongly consider invoice factoring as a way to improve your company’s cash flow.