Why Medical Receivables Factoring is More Challenging

Those who are unfamiliar with the nuts and bolts of factoring may think that getting funding for medical receivables is just as easy as that of a distributor or manufacturing company. Nothing could be further from the truth.

There are a limited amount of factors that fund medical receivables because it can be very risky for them. It takes a company who is very familiar with the complexities of medical billing. They must be able to accurately project the net collectible billing percentage to be applied to each invoice. An audit of the historical third-party receivables is conducted before the contract is signed. This can be fairly expensive (up to $5,000 for a small practice), so it's important that the provider be committed to factoring before the audit is conducted.

The audit allows the factor to determine the percentage of discount off the bill. The advance rate is applied to the predetermined net collectible billing. As you can see, this type of factoring is much more complicated than for most businesses.

Need working capital? Call me at 417.849.7394
Kent Harlan, CPA
Ozarks Capital Funding, LLC
www.ocflink.com
kenth@ocflink.com