Healthy Cash Flows

By Author: Jack Fedrock
Total Articles: 2
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This would seem to be a great time to be in health care! It is one of the few fields that is hiring more people than it is firing, baby boomers have started retiring and will certainly need more medical care in the coming years, and the government’s new health care program (a.k.a. ObamaCare) seems to have many goodies for the industry. Of course, states are cutting back and Medicaid reimbursements aren’t where medical professional would like them to be, but that’s just small potatoes, right? Well, maybe not.

Health care enterprises, whether they be surgery centers, clinics, hospitals, medical staffing companies, or DME’s (durable medical equipment manufacturers) have always had and will always have cash flow challenges at one time or another. After all, employees and fixed expenses have to be taken care of regardless of whether the invoices that you have sent out have been paid. Therein lies the dilemma – your business may be quite profitable on paper but have serious liquidity issues. For instance, that $250,000 in profit that is showing on your income statement doesn’t help much if you are required ...
... to pay out $100,000 this Friday to meet payroll and have no cash to meet that obligation.

Whiles loans and lines of credit have their place, medical factoring is often the best solution to short and medium-term cash flow issues. Medical factoring, also known as medical receivables factoring and medical receivables financing, allows you to collect on your invoices shortly after sending them out. For example, if you are sending out invoices totaling $150,000, you can receive an advance of 80% of the net collectable value within a couple of days. This means that you don’t have to be concerned about whether an insurance company or government entity pays you in 15 days, 30 days, or 60 days.

Medical factoring is appropriate for nearly any situation where a health care organization is billing out to a 3rd-party. It is not a good fit for personally injury cases or for chiropractic businesses, but can help in most other situations. Medical factoring is quite similar to the invoice factoring commonly used among industry in the commercial sector.

Medical factoring has advantages over other types of working capital finance due to its flexibility, speed, and ability to help your business maintain its momentum. Feel free to call or e-mail us if you have questions or comments. If you’re ready to move forward, we would request that you send to us a completed application, a copy of your Articles of Incorporation/Organization, your accounts receivable aging report, and, if applicable, a copy of your medical license. I look forward to speaking with you!

Alan Noblitt is the owner of Seascape Capital Inc and a commercial finance consultant who helps small and medium size businesses with business factoring, medical receivables factoring, and purchase order financing. He may be reached at (858) 672-4678 or toll-free at 1-800-634-4697. Seascape Capital is an accredited member of the Better Business Bureau, with the highest score possible of A+. If you would like to learn more about the topics listed above, visit www.seascapecapital.com.

For more information about Medical Receivables Factoring please visit www.seascapecapital.com