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Healthcare Factoring: How can SmartAn contribute?

One of the markets that SmartAn operates in is medical factoring. Throughout this article, we will explain how this market works and what SmartAn can offer to medical factoring companies. (spoiler: fasten up to 2 times the time needed to review loan applications).  

What Is healthcare factoring?
Healthcare factoring is a financing plan dedicated to companies in the healthcare industry that are struggling with cash flow issues due to outstanding invoices with net terms between 30 to 120 days. Healthcare Factoring is also sometimes referred to as medical factoring and healthcare financing. Typically, providers bill third-party payers such as insurance companies, Medicare, and Medicaid.

According to the Factoring Marketplace, there are 784 626 medical factoring companies in the US, and the global healthcare factoring market accounts for about $230B.

Why do companies use factoring?
The short answer is that healthcare factoring companies are a great way to reduce a company's monthly debt payments. Healthcare factoring companies purchase the accounts receivable of hospitals, physician practices, and other medical service providers. The company then pays off the principal balance of the account receivable in exchange for a percentage of future collections (typically 18-24 months). It’s also a much quicker way to get funding compared to getting a loan. Loan review might take from several days to weeks and that’s a lot when the payment cycle is just 30-120 days. 

Although factoring is a much quicker way than getting a loan it still has its own limitations.  In most cases, factoring companies require having a good credit history and an established track record in your industry before they will consider your request for a loan. The process of reviewing, collecting, and reviewing financial documents is complicated and takes a lot of time. 

Another problem is old data. In most cases, lending decisions are made based on outdated data, and factoring companies don't usually fully estimate this problem. 

SmartAn provides a way to increase the data collection process by up to 2 times. That happens as SmartAn software offers a way to get real-time accounting data so decisions become more accurate. With SmartAn technology, factoring can be done faster and more efficiently.

Are you interested in learning more? Feel free to contact us.