Traditionally, medical companies do have customers with a tendency to pay slowly, which directly affects the business by troubling the growth and the cash flow of the company. For this particular concern, medical companies could advantage from healthcare account factoring, also known as medical factoring.
TOP 5 IDEAS HOW MEDICAL FACTORING WORKS?
Here we will be discussing how medical factoring works.
Medical factoring guides the medical companies that bill private insurance companies like Medicaid and Medicare that have problems with the cash flow mainly because of delayed and slow payments. This variety of financing is usually used by medical competent and healthcare suppliers.
The lengthy hold up between when the facilities are delivered and when the payment of the bills is done can create enormous problems with the cash flow for suppliers and providers.
Medical factoring deals with this problem by offering the healthcare providers with the avenue to cash immediately for invoices that are yet to be paid by Medicaid, Medicare or other independent insurance companies.
SIMPLE AND EASY
Healthcare institutions and companies should work with a factoring company to procure financing. There are numerous healthcare invoice factoring companies, and each of them operates along similar ways for a similar purpose.
Transactions and arrangements are straightforward. You auction and appoint your claims to a medical company. The financial company accelerates funds for the claims and maintains the claims until the time of expiration. The transaction is clear when the insurance bearer pays the claims.
Transactions work in order. Firstly, you deliver your supported claims to the factor. Then the factoring company moves forward up to 80% of the claim. The claim is generally paid in about 30-120 days. The agency reimburses the resting 20%, minus the financing fee. These steps differ based on the capacity of the claims and the capacity of the business.
ANALYZE AND INSPECTION
Once a medical company picks a factoring company, then the factoring company will analyze and inspect the business. They will also survey the account statements and information on clients and patients. This is how medical factoring works.
After considering and examining the company, the healthcare company will wave an agreement and arrangement with the factoring company. This agreement would include information about the payment method, and the maximum dollar credit line.
AGREEMENT AND DELIVERY
Once the agreement has been arranged and signed, the factor will deliver amelioration to the healthcare company also known as the advance rate, which is normally 80-90% of the accounts rate. Factoring involves transmitting the authority of bill and check collections of the factoring company.
The clients would then be contacted by the factoring company regarding how to deliver the payment. Once the client has cleared the payment, the factoring company would send the remaining amount also known as the reverse amount, to the company.
The factoring company would also reimburse or compensate for their assistance by deducing their service fee or provide a bonus from the payment.