Factoring Blog

Invoice Factoring Financing For Health Care Staffing Companies

 health care staffing agencies - invoice factoringManaging the cash flow of a healthcare staffing agency can be difficult. Most healthcare staffing customers – such as hospitals, nursing homes and medical offices –  pay their invoices every 30 to 60 days. However, your employees need to be paid on a weekly or biweekly basis.

This won’t be a problem for agencies that have a bank line of credit or are well capitalized, since they will be able to use available funds to pay expenses while waiting to get paid by customers. However, if the healthcare staffing agency does not have a line of credit or is not well capitalized, it could run into problems. The most common problem is not having enough money to cover payroll. Obviously, this is a serious problem.

Solve the problem by financing your receivables

One way to solve this common cash flow issue is to use receivables financing  for staffing agencies. It solves this problem by financing your slow paying invoices from credit worthy commercial health care customers.  Basically, an invoice factoring company advances funds to your company using your receivables as collateral. This provides your agency with the money it needs to meet payroll and other critical expenses. This program minimizes the impact of slow paying customers on your finances, enabling you to focus on taking on new business.

Simple transaction

You receivables are financed in two installments – called the advance and the rebate. The advance rate is often 90% of the gross value of your invoice. Funds are advanced as soon as the work is completed and the time cards are verified. The rebate covers the remaining 10%, less the funding fee. The rebate is wired once your customer pays their invoice on their regular schedule.

The cost of the service is determined by the credit quality of your clients and the size of your accounts receivable. Rates often go from 1.5% to 3.5% per 30 days, based on this criteria.

Qualification

One of the most important advantages of factoring invoices is that it is easier to obtain than conventional forms of financing. To qualify, your staffing agency must be able to meet this requirements:

  1. All employee taxes must be paid and up to date
  2. Your company must be free of legal problems
  3. Funded invoices and time cards must be for completed time
  4. Your customers need to have good commercial credit

A flexible an adaptive solution

A major advantage of factoring financing over other solutions is that it can easily adapt to the agency’s growth requirements. Your healthcare staffing agency’s factoring line can grow alongside your sales, as long as your company meets the funding qualification requirements. This makes factoring an ideal solution for growing agencies that have financial problems due to slow paying customers.

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