Medical practices are businesses, and like any other business, they need to make sure that their income is consistent. To do this, most medical practices factor their invoices to ensure a steady stream of cash flow. But what does it mean to factor in an invoice?
What Is Factoring?
Factoring invoices is a financial transaction where a third-party buyer (the factor) pays the amount to the medical practice, and then collects payment from the insurance company or patient. This allows medical practices to receive their payments sooner than if they had to wait for their clients to pay them directly. The factor will take on the risk of nonpayment and any additional fees, which can be particularly helpful for medical practices that have to wait weeks or months for payment from insurance companies.
The Major Benefits of Factoring
Aside from quicker payments, there are several other benefits to factoring in invoices. For one, it helps medical practices maintain a positive cash flow since they’re able to receive money sooner than if they had to wait for the invoice to be paid. Additionally, medical practices don’t need to worry about credit risk since the factor takes on that responsibility. Finally, medical practices can save money on administrative costs since they don’t have to spend time and resources managing invoices and collecting payments.
Factoring invoices can be an important tool for medical practices to ensure a steady stream of income. By taking advantage of the benefits it provides, medical practices can improve their cash flow and reduce their administrative burden. For more information about factoring invoices, contact the team at GM Capital Group. We’d be happy to discuss how we can help your medical practice get the most out of the process. Our factoring services provide funds within 48 hours, and there is no limit on the number of invoices you can submit to us.