Invoice Factoring Gives Dental Practices Working Capital For Growth

Dentist face a variety of day-to-day challenges, from keeping on the cutting advantage of new techniques to marketing their practices to meet increased competition. Retaining an enough level of dental practice seed money does not have to be a problem because dental invoice factoring stabilizes cash flow.

Most people view dentists as “rich” and may have no need for short term funding. While many dentists earn a good living, cash flow can often be a problem due to time it takes to accumulate from third-party payers such as insurance companies and national and state programs. The wait can be as long as 120 days and nights, while payroll, rent and other operating expenses must be paid sooner. This kind of imbalance of payments vs collections can cause a serious problem with the significant capital position of the practice. Dental data files receivable factoring brings cash flow into balance and provides the funds to make payments promptly and grow the practice. 

For what reason use dental invoice invoice discounting rather than just going to the bank?

Most banking companies are leery of financing against dental or medical receivables due to complexities of the collateral. Medical and dental billing isn’t that way of other industries due to variance in what is actually collected. Each insurance company may have a different contracted rate. Quite simply, a procedure billed away at $8, 000 may cause a collection of $4, 000 from a single insurance company and $5, 500 from another. Banks will probably be very conservative as to the amount they loan on receivables. With oral invoice factoring, the amount of funding is merely limited to the pool of alternative party receivables which may have recently been generated. Dental working capital loans can even be made available from banking institutions, but are typically limited to $100, 000 and are typically used for a particular purpose like personal debt consolidation or expansion. The types of loans much harder to get, as a minimum of your 685 credit score and a track record of practice profitability is necessary. Factoring can be used to provide working capital on an ongoing most basic and the qualification in this type of dentist loans is not dependent on credit scores of the dentist or performance of the practice.

How exactly does dental care invoice factoring work?

The dentist first completes an application, which asks various questions about the practice. Other information, including the articles of incorporation and a receivables aging schedule are required. After the application is reviewed by the financing company and it’s really determined that the practice appears to be a viable prospect for financing, a notice of intent (LOI) is issued which states the conditions and conditions of the partnership. Such conditions include the advance rate (the amount of cash provided to the provider on a percentage basis) of each invoice and the fees to be billed. Once the letter of intent is accepted by the dentist, an agreement is made and a research audit is scheduled. The audit is necessary for the factor to determine the average net unique percentage and the adequacy of the practice’s records system. Once the deal is executed and the audit is completed, the dentist can start submitter invoices for funding on typically a weekly most basic. The factor will improve the contracted rate and immediately wire the cash into the practice’s loan company account. Upon collection, the between what is accumulated and the amount advanced is remitted to the practice, less the amount of fees associated with the financing. At this point, the transaction is closed.