Financing Your Medical Staffing Agency
Factoring is the birth child of the regulatory medium designed by banks to decrease and avoid high-risk loans. Commercial banks are not internally structured to handle the dynamic nature of the medical staffing industry.
Factoring has provided accounts receivable financing for small and medium size medical staffing agencies. Factoring is the product of banks inability to provide loans for small businesses
The difference between factoring and banks is banks provide loans based on your history, credit worthiness and ability to make payments, you are expected to make monthly payments on your loan on good times and bad. Factoring usually only require proof of client's accounts receivables in order to receive funding.
Here is how factoring works:
1. Your invoices are recognized as immediate asset
2. The invoices are verified to advance funding.
3. Usually between 60% to 90% of invoice value can be advanced.
4. Funding can be provided the same day
5. Certain percentage of the invoice is kept until you pay the amount owed
Example:
Factor amount of $2,000
90% Advance ($1,800)
10% held in reserve ($200)
Once Invoice is paid the following occurs
3% transaction settles ($60) FEE
Withdraw account balance ($140.00) your money
The cost of borrowing $2,000 to cover your invoice is only $60 dollars
Factoring is a viable alternative to securing loans to cover your invoices. Why is this important? The medical facilities are notorious for paying invoices on net 60, net 90 and at times net 120. If you are a new company providing staffing to various facilities it would not be impossible to accumulate a $50,000 payroll debt before you even get paid from these facilities.
Factoring is a respected alternative that is widely used and accepted in the medical staffing industry. This form of financing can help your medical staffing agency from dying a horrible death from an inability to cover your invoices. This is a fact that many starting a medical staffing agency are not aware off and are not told.
There are many other factors that can deal a heavy blow when starting a medical staffing agency. The above is just one example, as a consultant my primary role has been to help new and existing medical staffing agency avoid the hidden industry mistakes.
Related Tags: healthcare, factoring, medical staffing loans, medical staffing factoring, medical registries, roy
Roy Vera, MBA, RT is a successful medical staffing consultant. As a former owner and director of marketing in the medical staffing industry he brings a fresh new look for the industry. http://www.vismedical.com
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