Financing the growth of any business can be a challenge, especially for ones that offer credit terms or have to wait for payments to be processed. The medical profession is no different and, if you have a small medical company, it can be particularly difficult. If your products are sold to dentists, doctors, or even the NHS, you could have to wait a while for invoices to be settled. The NHS, for instance, aim to pay any invoices they receive within 30 days but, if you have won a large contract with them, that time lapse could be disastrous for your company.
With other customers, you have no guarantee how long you will have to wait for your money, and bad cash flow could have a very adverse effect on your business.
How Medical Invoice Factoring Could Help Your Business
If you are wondering how does medical factoring work, it settles your invoices with no delay. In most cases, you will receive payment with a few hours or the next day. You would normally receive 90% of the full invoice amount; the balance is passed to you when the customer has paid the factoring company. From the remaining 10%, they will deduct their fees, so your business never actually has to lay any money out.
You are basically borrowing the money from the factoring company but, because it is short term, it can be one of the least expensive ways of funding your cash flow.
You could arrange a bank loan or a bank overdraft. The problem with both of these methods is that they are a one-off hit. Once the money from the loan has been used, or the overdraft has reached its limit, they will no longer help your day-to-day cash flow problems.
They may be ideal for making a purchase of a piece of equipment or new road vehicles, but to have a constant flow of money into your bank account needs something different.
Taking Advantage Of Settlement Discounts
The best way to make sure your business is a success is to run it efficiently. Keeping costs to a minimum and meeting agreed delivery dates are two very good first steps. A popular way in the UK for getting people to pay earlier than they normally would is to offer a settlement discount. This works by letting you pay a smaller amount if you settle your invoice within a few days.
Using medical invoice factoring can let you take advantage of these discounts, which will mean that your bills are always paid and you will never be refused a delivery because of late settlement. This, in turn, means that you will be able to meet the delivery dates you have agreed with your customer. The discount you receive will offset the factoring companies fees, so you are no worse off but have the cash flow to keep your business running effectively.
Medical invoice factoring has made it possible for many small businesses to survive and grow and, without it, that might not have been possible.