Healthcare and medical providers face a lot of challenges in their day-to-day business operations. One of the biggest is collecting on accounts receivable. It doesn’t matter if you manage a medical practice, home health service, imaging center, or medical equipment supply company, the frustration is the same. Medical billing and working with insurance companies is a complicated process that can often take up to 6 months. The gap between the time of products or services rendered and receiving payment can wreak havoc on working capital and cause business growth to stagnate. Factoring is a funding option that healthcare and medical providers can use to convert outstanding receivables quickly and efficiently into cash. The benefits provided by factoring can keep your business on track and eliminate the stress caused by insufficient working capital.
The payment of medical claims is typically unpredictable. Some clients and insurance companies pay quickly while others can take months to remit payment. This inconsistency can make it difficult to meet the demands of daily operations and almost impossible to plan for future growth. With factoring, outstanding invoices can be paid in a matter of days instead of months. As a result, your cash flow will increase and become more predictable.
This can be extremely important for smaller providers looking to grow with limited resources. By increasing your cash flow, factoring can help you improve your marketing and increase your client base. It will also eliminate the struggle to remain current on your operating expenses and let you focus on taking care of business.
Utilizing factoring to fund your business puts you back in control. You are no longer at the mercy of clients and insurance companies. Always having sufficient working capital on hand will allow you to take advantage of unexpected business opportunities as they arise. Factoring also provides funding flexibility. While they must be owed by creditworthy sources, you can choose which outstanding invoices you want to factor. As your business evolves, you can factor additional invoices to meet the demand of increasing growth.
Waiting for outstanding invoices to be paid can cause excess debt to accumulate. This can cripple your business. Factoring can be used to reduce outstanding debt and ensure your creditors are paid on time, which will help build your credit. Strong credit history and a good credit score can make a wider variety of financing options available to you should you need them. Factoring will also reduce the amount of debt that is owed to you. Once your outstanding invoices are purchased by a factoring provider, they are no longer owed to you but to the provider and will be paid to directly to the factor. The factoring process allows you to get the cash you need without diluting equity or taking on additional debt.
With a traditional bank loan, the application process can take weeks or even months. With factoring, once the invoices have been verified, you can receive 75% – 90% of their face amount within 24 hours. This wires directly into your business account.
The duration of factoring agreements varies from one provider to another. They can be a one time purchase of invoices or an ongoing purchase agreement, usually no more than 2 years. A traditional business loan secured through a bank typically lasts 3 years or more and you are taking on additional debt. Factoring can be a great short-term funding option.
Think factoring could be the right solution for your healthcare or medical business? Let’s talk. Capflow Funding Group specializes in factoring and will work with you to find the best funding solution to provide your business with immediate working capital. We service many different industries with a variety of different funding needs. Contact us today and find out how invoice factoring can help grow your small business.
With the boom we saw in the US economy in 2018, many small business owners are probably looking to 2019 to be the year they accelerate business growth. While the White House economic advisor Kevin Hassett has said economic growth in 2019 will surpass predictions, not all the financial analysts agree. Many believe the economy will slow down in the new year and fall short of the three percent growth the White House is predicting. If that’s the case, business owners may have to think outside the box if they want to grow their business and make it stand out among its competitors in the upcoming year. What worked well during an upswing in the economy may not be as effective when it begins to take a downward turn. While these ideas may not appropriate for every business, they could be worth considering for some.
This may sound silly since we’re talking about stimulating business growth. After all, look at the online retail giant Amazon. You can find almost anything you could possibly want to buy and there is a multitude of product styles and options to choose from. However, such a vast selection can cause some consumers to become overwhelmed and not make a purchase at all.
There have been various studies on what is known as the “paradox of choice”, a concept explored in a book of the same name by the psychologist, Barry Schwartz. In 2000, joint research was conducted by Stamford and Columbia Universities that found that when given too many choices, many people simply chose not to make a purchase.
During the years that followed, there have been both supporting and conflicting studies. Most recently, a study by Stanford Graduate School of Business marketing professor Itamar Simonson revealed that while people do like larger selections, it depends on where they are in their decision-making. For the person who is still at the point of deciding if they even want to make a purchase, a larger selection can have a positive impact. However, the person who has definitely decided to make a purchase will be more receptive to a smaller selection.
What does all this mean for business owners looking to grow their companies in the new year? Instead of expanding their product or services offerings, some small businesses may want to consider limiting their offerings to their best sellers. Focusing on what they do best could be the key to business growth in an uncertain economy.
While slimming down product or service offerings may be the right choice for some businesses, others may want to look at adding more value to what they are currently offering. New products or services are often meant to grab the attention of potential customers. When looking to add value, listen and evaluate what existing customers are asking for. What do they want that you’re not providing?
Once you’ve analyzed your customers’ needs and expectations, dig a little deeper. What do they want that your competitors aren’t providing? It could be better quality, faster delivery, expert assistance or streamlined services. Whatever it is, this is your sweet spot and incorporating it into your current offerings will not only grow your business, it will set you apart from your competition. This may involve some big changes to operations, branding, and company culture but they will be well worth the investment.
It’s easy to stick with what you know, but to sustain business growth in the new year, many businesses will have to look beyond their existing audience. That’s not to say you should abandon them, just find a way to increase their numbers. Is there a demographic you’ve overlooked in your marketing that could benefit from what your business offers? Do you need to offer something else to lure them in?
Doing what you’ve always done isn’t the way to fuel growth. We can all name brands that became insanely popular and then completely disappeared. For a business to become and remain successful, it must constantly adapt to changes in the market, and the current perception of a market leader. Look at your business and its offerings from the customer’s perspective, and adapt to address their changing needs. It’s equally important to remain aware of your competitors’ intentions and capabilities.
Growing a business is a big investment that takes both time and money. If financing is holding your business back, Capflow Funding Group may be able to help. We specialize in factoring to businesses in need of short-term working capital. We also partner with other lenders to provide funds for businesses that require financial services other than ours. Contact us today and find out how we can help you grow your business.
