Instant Factoring Quote

As low as 1.15%

Article: Financing a Medical Supply Company

Running a medical supply company requires a significant amount of working capital. Aside from paying regular overhead expenses, you have heavy ongoing inventory expenses. Inventory is your largest expense and probably the most important one. Without it, you have no business.

However, medical supply companies face constant financial pressures from insurance companies. Not only are they trying to reduce the amount they pay for claims, but they are also taking longer to pay them.

Slow insurance payments affect cash flow

Slow-paying medical claims can create cash flow problems for companies that don’t have financial reserves. In turn, cash flow problems affect your ability to replenish inventory, pay employees, and cover other expenses.

This problem does not usually affect larger supply companies because they can afford to wait for payment. However, slow payments affect small companies and fast-growing companies who don’t have large reserves.

Improve cash flow with medical factoring

One way to improve your cash flow and accelerate your revenues is to factor your medical receivables. Medical receivables factoring finances your slow-paying claims from private and government insurance companies. It provides you with immediate working capital to pay for employees, inventory, and other business expenses.

How does medical factoring work?

The process is simple and can be used by most supply companies. Medical factoring companies finance your insurance claims in two installments: the advance and the rebate.

The advance covers 75% to 85% of the net payable value of the claims and is paid soon after your submit the claims for financing. The rebate covers the remaining 15% to 25% and is deposited to your account once the insurance company pays for the claim in full. The rebate settles the transaction.

Most transactions follow this format:

  1. The medical supply company submits a batch of claims for financing
  2. We process the claims and deposit the advance to your bank account
  3. Insurance companies pay the claims, 30 – 100 days later
  4. We deposit the rebate into your account and collect our fee

For a more detailed explanation of the process, please read “What is Medical Factoring?

Can Medicare/Medicaid payments be financed?

Most Medicare and Medicaid claims can be factored, though they require a special process. Usually the account that receives payments must be converted into a special sweep account (also called a “control account”). This conversion allows the medical factoring company to process payments and settle transactions.

How much does medical factoring cost?

The cost of the service varies based on the size of the financing line, the length of time it takes to get claims paid, and other variables. Costs range from 2% to 3.5% per 30 days.

For an online medical factoring quote, fill out this form. To speak with an expert, call us toll-free at (877) 300 3258.

How long does it take to set up an account?

An account can be set up in as little as five days. However, actual setup time can vary based on the complexity of the account, the accuracy of your financial reports, and the size of the line.

Who qualifies for medical factoring?

This service can be used by any medical supply company that:

  1. Submits claims to medical insurance companies – or to other commercial entities
  2. Has cash flow problems because claims pay slowly
  3. Has no liens against their accounts receivables
  4. Has no serious tax or legal problems.

Note: we can work with companies that have tax issues as long as they are working towards a resolution with the taxing authorities.

Return to the Medical Factoring Resource Center