Home Finance Factoring The Pros And Cons Of Money Factoring

The Pros And Cons Of Money Factoring


Money factoring allows your medical practice to maintain a steady cash flow regardless of when your patients are able to pay their bills.

Companies called factors will give you up to 90% of the total of an unpaid invoice. Once your customer pays their bill, you’ll be reimbursed the additional 10% minus the factoring company’s fee.

The benefits of money factoring include:

A steady, positive cash flow that allows you to access funds within hours.

The ability to accurately manage your finances and plan for the future.

Lots of competing factors vying for your business and offering great rates.

Support in getting past due invoices paid fast.

But money factoring has its drawbacks too.

Borrowing from a factor is not free – fees and interest can add up quickly with each factored invoice.

Factoring companies may chase after your clients and demand payment using tactics you’re not comfortable with.

Some factors will not do business with you unless you give them a say in the types of patients you accept at your practice.

Money factoring should be considered a good short-term solution for growing medical practices that need cash flow assistance, and not a permanent solution to profitability problems.

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