7 Reasons Medical Practices Use Invoice Factoring
Many companies can benefit from invoice factoring. However, medical practices in particular should look at it as a viable option to generate more cash flow. There are many reasons to start implementing it at your practice.
- Quick Cash
Medical practices bill patients for any services rendered. Most individuals will likely pay off those bills in a timely manner. However, others can take some time. With factoring, you can sell off certain invoices, so you get paid right away instead of having to wait months.
- No Debt
This form of financing is often preferable to a loan because you will not accumulate debt. You get the money you need, and you will not have to worry about paying off excessively high interest rates.
- Reasonable Fees
Invoice factoring companies do take a fee from the value of the invoice. However, once you consult with a few businesses, you will find that the fees are perfectly reasonable. You are still getting most of the value of the invoice.
- Flexible Spending Options
This financing option allows you to spend the money you receive any way you see fit. Some loans will lay out specific details about how exactly the money can be spent. The factoring company is not going to tell you how you should spend the cash.
- Less Emphasis on Credit Score
Getting a traditional loan can be hampered with a low credit score. Many medical practices may have low or non-existent credit histories due to being new. However, capital still needs to be raised to expand and succeed. Invoice factoring companies do not look at this score. Instead, they look at the payment history of your clients to see if they will get paid back reasonably soon after buying your invoices.
- Reduce Stress
Trying to get certain customers to pay off an invoice can be stressful. You may be dedicating a lot of resources to contacting individuals to tell them they need to pay you. With factoring, you sell off your invoices, so contacting clients becomes someone else’s responsibility.
- Good Terms
Many factoring companies are really flexible when it comes to the terms you can get. Often you can decide how long the contract is, so if you do not want to do this financing for years on end, you can choose to do that.
Running a medical practice is tough. Do not make it harder on yourself, and start utilizing invoice factoring to great effect.