There’s no denying that the recent pandemic has had a significant impact on many businesses. Retail businesses and restaurants were hit particularly hard. Even some of the major players took a hit. Nordstroms, Bath and Body Works, Victoria’s Secret and Starbucks have announced that multiple locations will be permanently closing. If these large companies are struggling to stay afloat, it is, of course, even harder for smaller business retailers and restaurants to ride it out and successfully reopen. After the major financial loss they suffered, merchant funding solutions are at the top of most of their reopening checklist.
However, to ensure reopening success, small businesses are going to need more than just fast working capital. They are going to have to take a long, hard look at the damage as well as their existing strategy. Retailers and restaurant owners have to position their businesses to adapt to the new normal for their industries if they plan to emerge from this victorious.
It’s important to know where you stand financially when reopening your business. Now is the perfect time to update your financials. By comparing them to last year, you will be able to accurately assess your losses. Many small retailers and restaurant owners will have either depleted their reserve of working capital or did not have enough in reserve to begin with. This means they will need to explore various merchant funding solutions. In addition to determining which is the best for your specific situation, you will also need to determine what you need to do to recoup those losses.
What worked before the pandemic, may not work after it’s been contained. Even as restrictions are being lifted, many people are wary of putting themselves out in the general public. Retailers and restaurant owners will need to rethink how they do business and which areas of their business they need to make a priority going forward.
Whether you were closed or conducting business on a significantly reduced scale, this resulted not only in lost revenue but also in lost customers. Many retail customers turned to Amazon to get what they needed. Restaurants that remained open found themselves competing with local pizzerias and fast food joints specializing in taking out and delivery. You may have to rethink how you do business to lure customers back. You may need to increase or retarget your marketing efforts and prioritize different aspects of your business. You may also need to hire new employees or retrain existing ones to effectively implement your new business plan.
Experts predict another wave of COVID-19 to hit in the fall. Even if it doesn’t happen, some other future crises could potentially derail your business. If you were prepared this time, good for you. If you weren’t, it’s time to create a contingency plan so you aren’t completely blindsided the next time. In addition to diversifying your business plan, look for ways to build up your reserve of working capital. Reduce nonessential spending or implement more efficient operating procedures. You may also want to focus on paying down debt, leaving you with fewer financial obligations should another crisis occur.
If you’re in need of a little help getting your business back on its feet, CapFlow Funding Group may be able to help. We specialize in invoice factoring and merchant cash advances (MCA). For retailers and restaurants, an MCA can be one of the best merchant funding solutions. It can provide you with the fast working capital and revenue-based repayment, without the need for a perfect credit score or taking on additional debt. We are dedicated to providing the short-term working capital you need to rebuild your business and will work with you to find the best funding option.
CapFlow also works with trusted partners to provide other merchant funding solutions that may be better suited to our clients’ business needs. We service many different industries with a variety of funding needs. Contact us today and find out how invoice factoring can help grow your small business.
Receiving payment on medical invoices can be a long, drawn-out process. Unless the client is paying for your services out of their own pocket, a claim has to be submitted to a third-party payer. These can include Medicaid/Medicare, HMOs, private health insurance companies, worker’s compensation insurance, and personal injury lien settlements. Waiting to receive payment from these agencies can take weeks or in some cases, months. For many medical practices, especially the smaller ones, this can create a gap in their cash flow. Factoring insurance receivables can be a great alternative to waiting for these agencies to pay the submitted claims.
Normally after rendering services, the medical practice will submit a claim to the appropriate agency and then wait. By factoring insurance receivables, practices can skip the long wait. Instead, they would also submit those claims to a factoring provider. Once the claims have been approved by the provider, the practice would receive a percentage of the net value of the claim, typically 70 to 80 percent. Payment is then owed to the factoring company. Once they receive payment, the balance minus a small fee is sent to the medical practice.
It’s important to understand that the net value is the amount the insurance company or agency deems appropriate for the services rendered. This can be significantly less than the amount the medical practice bills for those services. However, if the practice has agreed to provide care for the participant of a specific insurance program, they also agree to accept the amount that agency will pay for those services.
Consistent, predictable cash flow – Probably one of the best and most obvious benefits of factoring your insurance claims is the impact it will have on your practices cash flow. Waiting for insurance claims to be paid can cause your cash flow to dwindle. For smaller practices, it may even become difficult to cover operating expenses. Factoring insurance receivables will regulate your cash flow and alleviate that struggle.
Encourages business growth – Unpredictable cash flow not only makes it difficult to keep up with operating expenses but it makes growing your practice almost impossible. Consistent cash flow makes it easier to plan for business growth. It may also allow you to take advantage of unexpected growth opportunities you would otherwise have to let pass you by.
Avoid taking on debt – When you get a business loan, you are taking on additional debt. With factoring, you are simply getting an advance on money that is already owed to you. Factoring can also be easier and quicker to obtain than a business loan. Providing you with the cash you need now without the long term debt.
Maintaining a consistent cash flow can be a challenge for many small businesses. However, it can be particularly difficult for a medical practice at the mercy of insurance companies. Factoring can be a great alternative funding option that can prevent the slow payment of insurance claims from interrupting your cash flow.
Not sure if factoring insurance receivables is the best choice for your medical practice? Then it’s time to consult with business funding professionals. CapFlow Funding Group specializes in factoring for a wide variety of industries, including medical practices and healthcare facilities. We will work with you to find the best funding solution to provide your practice with immediate working capital. We service many different industries with a variety of different funding needs. Stop waiting for insurance companies and other agencies to pay medical claims. Contact us today and find out how invoice factoring can help grow your small business.
