All You Need to Know about Medical Receivable Financing

Medical receivable financing is virtually unknown in the medical and financial world. It is a type of financing that can help fund medical offices and is designed to be an asset-based line of credit to help in the day-to-day operations of a medical facility. It can be beneficial to many different businesses and has several advantages. Here are a few things to consider about medical receivable financing. 

How it Works

A medical business typically has a great amount of outstanding accounts receivable balances. They render service to customers and then they often have to wait for payment from insurance providers. Insurance companies, PPO's, HMO's, Medicare and Medicaid can take up to 150 days to pay their bills. This is money that the doctor's offices and medical facilities have to wait for. In the meantime, they still have to pay their employees, light bills, rent and many other expense that they have. 

Bridging the gap between rendering the service and receiving payment for the service is what medical receivable financing is all about. Once you render a service that will be covered by a qualified medical organization, the facility can immediately get the money that they need from a medical receivable financing line of credit. You submit the charge to the financing company and the money is immediately transferred to your account. 

From there, the medical receivable financing company is not paid until the bill is paid by the insurance provider. They charge an interest rate for this service, but they do not require any payments until the bill is paid. This gives the owners of medical clinics a great deal of flexibility along the way.


  • New business help- When you are a relatively new business, you can have a hard time locating a bank that will lend you money. Most of the time, banks will require at least three years of successful business history before they will lend you money. During that time, it can be very difficult to pay all debts. Medical receivable financing is a way to get around this.
  • Cover payroll- One of your biggest expenses as a business owner will always be payroll. Your employees can not wait around on the insurance payment before they can get paid. You have to meet payroll every pay period or you will soon be without employees. Medical receivable financing can help cover this until you are paid. 
  • Low interest- The interest that many of these financing companies charge is actually quite low. In some cases, you can find interest that is below 2% depending on the company and the situation. This will make the interest that you pay for the money a lot more bearable. 
  • Can be used for expansion- Many types of loan programs have restrictions on what they can be used for. This can make it difficult to grow the business. With this type of program, you can buy equipment, expand the facilities and do a number of different things. 
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