Operating a nursing home can be a very challenging prospect in today’s world, given the fact that payments from Medicaid and from other insurance carriers are often late, or are not sent at all. This of course can create some serious cash flow problems, and all of these have to be handled with a great deal of care, in order to avoid reducing the quality of care for patients.
Factoring in the medical industry
Unfortunately, traditional business loans will almost never work for financing a nursing home. These loans almost always take too long to arrange, and most of them call for significant collateral, which nursing homes are notoriously short of. The answer therefore, must come from accounts receivable factoring, which is a much more flexible financial product that can solve all the issues of slow payments and non-payments from customers.
What is medical industry factoring?
Instead of waiting for insurance carriers or Medicaid for between 30 days and 120 days or longer, factoring can put cash in the hands of nursing home management in a matter of a few days. Once factoring has been set up with an alternative lender, a nursing home can receive payments on invoices to clients immediately, as opposed to applying for a bank loan, which might take months.
How medical industry factoring works
Factoring for a nursing home can be a very simple process which occurs in two steps, the advance step and a rebate step. The advance amount is remitted to the nursing home shortly after claims are made for financing, and it covers approximately 75% of the claim value. The remaining 25% is remitted to the nursing home after the claims have been paid by insurance companies, and a factoring fee has been subtracted by the alternative lender.
Financing options with Durham Commercial Capital
When your company needs capital for improving day to day operations or when planning for business growth, you really need a trusted partner with whom you can discuss financing options. Durham Commercial Capital has filled this role with literally thousands of small businesses before, and we would like to assist your company as well. Contact us so we can discuss financing options that will benefit your small business.