Using Accounts Receivable Financing for Nursing Homes
Finding the right financing for nursing facilities can be easier than you think. There are several different types you can research to find the best fit funding for your needs. For instance, you can look into traditional bank loans, accounts receivable financing and investors. With many different types of companies, accounts receivable financing may be your best bet because this type does not require a credit check, can get you the funds more quickly and do not require you to justify your needs to a third party.
What Is It?
Accounts receivable financing is not a loan, so what is it? It is an advance on the money owed by your patients based on the invoices generated at the time of service. For instance, it is common to wait for payments from insurance companies after they get the invoice. Unfortunately, your bills will not wait for your patients, and their insurance, to pay for services. With accounts receivable financing, you can contact a factoring company for an advance and get the funds you need within days instead of months.
How Does It Work?
Nursing facilities which use accounts receivable financing, or factoring, will take an advance on a percentage of the invoice amount and then pay it back when that invoice is paid. Since this is not a loan, there is no interest involved and the factor makes money by charging a small percentage of the advance as a fee. This fee is usually less than five percent, but it is a good idea to shop around for the best deal for your facility. With accounts receivable, you are still responsible for collecting on the invoice. This can make it easier to determine how much you want to get in your advances as well as make it less confusing for your clients.
Where Do You Get It?
Accounts receivable financing is available through companies usually referred to as factors. These companies are generally set up to do both accounts receivable, where you keep possession of the invoices, and factoring, where they take over collections for you. This can help you decide which form is best for your facility.
Nursing facilities can have cash flow problems the same as any other type of company. This means that you will need to have a solution that works for you and for your patients. With accounts receivable financing, you can get the funds you need, for the work you have done, when you need it.