Though the physicians knew that the insurance companies would pay eventually, the delayed payments were causing problems with their company’s vendors.  Because the physicians also had bills of their own, including mortgages, childcare expenses, and student loans, they were reluctant to cut their own pay to make up the difference.

The insurance companies that the doctors contracted with had been around for decades and had never missed payment.  Because of their solid reputation, the physicians were able to turn to a factoring company to resolve their cash flow issue and pay their regular bills in a timely manner.  Ensuring that their vendors were happy was key to keeping the practice running and making sure that they had the products and outside services that they needed to run a successful practice.

 

With the large payments from reputable companies due in the next few months, the physicians were the perfect candidates for a factoring agreement.

They sold several outstanding invoices to a factoring company who, in turn, gave the physicians cash equal to 90% of the invoice amounts within a few days of entering the agreement.  The factoring company retained a small fee, and the physicians received the remainder of the invoice when it was collected from the insurance companies.

 

With the cash in hand, the physician practice was able to bring all their bills current while continuing to pay their staff and themselves the salaries they were accustomed to.

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