As we witness a steady inroad of newer standards as well as practices in the healthcare segment, the risk factor for the providers is increasing with time. It’s no wonder that some of the biggest providers today look for account receivables purchasing solutions that will help them gain financial credibility.
While many entities are still looking for regular bank loans to complement their financial activities, costs of administrative nature can skyrocket out of proportions if the organization is in a bad shape. If the organization continues to suffer then they will be forced to take more drastic action such as getting a payday loan to keep on top of their monthly bills. This can be ok for some but other practices won’t be able to pay back the loan and will need payday loan relief to help them. These loans just aren’t sustainable in the long run.
Lack of best practices
One of the critical elements for any healthcare business is the lack of propriety in accounts receivables that can be catastrophic.
There are several reasons for an inconclusive approach starting from a vague practice management process to improper claims submission leading to errors in the denial management process.
? While the provider spends endless hours with high recurring costs on A/R recovery, it pays little dividends while the practice soon loses out on a patient-centric model.
Salient benefits of factoring
One of the basic reasons why accounts receivable purchasing is preferred than banking finance is the hassle free transfer of innumerable accounts of a provider that are increasing the bad-debt in all attributes. The key aspects that are served are:
Transfer of ownership : It is true that an effective factoring company will eventually take the ownership of your old accounts in exchange for cash. They will take the onus of the risk factor associated with the accounts to themselves that clears your risk to a great extent.
Immediate availability of cash : While the purchasing company takes all the collection as well as the credit risks, you get immediate cash to expedite on your present requirements of quality healthcare equipment, infrastructural needs, upgrading care management solutions that are the primary demands of your business.
Overhead cost reduction : As you no longer require the examination function of your credit with effective financial advice, your overhead costs are reduced significantly. It helps your balance sheets to be strengthened leading to a conclusive roadmap for financial success.
Factoring solutions provide immediate benefits to the provider with real-time reduction of negative feelings of your patients without any requirement of collateral that is associated with bank finances with effective time-saving.