Some Great Advice to Help You Find the Best Working Capital Loans for Doctors

To be able to meet the current obligations and to grow the practice, today’s medical provider should be consistently having an adequate amount of working capital on hand. The amount of time the provider should wait for the insurance companies and other third-party payers to reimburse the practice for the services that are rendered is the serious issue that hinders the cash flow of the healthcare provider and this leads to the requirement for the working capital loans for doctors and medical practitioners.

To provide a stable flow of cash allowing the medical practice to pay their bills on time and increase the staffing during the growth periods is how the medical receivable factors can be a valuable tool.

How is a profitable medical practice be cash poor leading to the requirement for working capital loans for doctors?

So, what exactly is the working capital loan? At a relatively short time of frame, most of the expenses incurred by a medical practice must be paid. A cash squeeze is created with this coupled with the fact that a majority of revenues are derived by the third-party payers that pay anywhere from 30 to 120 days. Delinquent payments might be the result unless the practice has been able to accumulate a substantial reserve. It can also constrict to the cash flow even though they are paying typically within two weeks while filing electronically with Medicare. The disputes with the billing and the incorrect coding are the other sources of delayed payments. For a half year or more, these issues can drag out the collection process.

Why not get a bank line of credit?

Medical professionals are viewed as excellent credits assuming that they have good credit. To loan money to the doctors for medical equipment, acquiring a practice, or even consolidating their debt, banks usually have no issue to give away working capital loans for startups. It is typically not as easy as it might seem when it comes to granting a line of credit collateralized by the receivables of the practice. Since it is not always apparent as to what will ultimately be collected by the practice, the medical receivables can be a very complicated piece of collateral. The bank line might be adequate to maintain a sufficient level of working capital loans for doctors if the practice owners do not expect much of a growth. A lender who specializes in medical receivable financing might be required if the goal is to grow practice as most of the professionals does.

How a lender devoted to medical receivables financing can provide unlimited capital?

The healthcare business is pretty well-known by the medical receivable factoring the companies. They are able to provide the maximum advance rate of medical receivables relative to the practice’s situation as a result. The SBA working capital loan after being wired to the provider can be utilized for every purpose. For the payment, the practice manager can submit their invoices daily, weekly, monthly, or any combination of the time.

Read More: A Comprehensive Guide to Optometry Equipment Financing

What is the process of establishing a medical receivables factoring relationship?

1) You need to fill out a simple application.

2) From the factoring companies that spell out of the proposed advanced rate fees and the other terms, you need to receive a letter of the intent.

3) By signing the LOI the provider agrees it to the terms of the working capital loans for doctors and for the due diligence audit to the factoring company sends a check. Since it determines the average net collectible amount of the receivables, a due diligence review is a lot more critical. Any of the billing irregularities and errors can be disclosed. The amount of savings by correcting the errors usually exceeds the cost of the audit in several cases.

4) Between the medical practice and the factoring company that formally discloses all the terms of the agreement, a contract is executed.

5) The best working capital loans are wired to the provider’s bank account usually within 24 hours and the invoices are submitted to the factor.

6) The factor remits the reserve amount less the factoring fee upon collection.

7) Many of the healthcare providers have turned to the finance companies that specialize in the medical receivables to shore up their working capital needs as the credit crisis continues to cause the banks to restrict their lending parameters.