How Factoring Insurance Receivables Can Benefit Your Medical Practice
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.
How Factoring Works
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.
Benefits of Factoring Insurance Receivables
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.
Factoring Insurance Receivables with CapFlow Funding Group
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.