The notion of selling allied health staffing receivables to a factoring firm may sound like a difficult concept to understand, but in reality, nothing could be further from the truth.
In fact, there are many companies (i.e. respiratory therapist staffing agencies, radiology tech staffing firms, and physical therapist staffing agencies) that can greatly benefit from all that allied health staffing factoring has to offer. Namely, growing their companies without having to worry about how long it will take for their customers to pay them.
In order to help clear up any healthcare factoring misconceptions, this article will explain the allied health staffing factoring process step-by-step…
- The customer (i.e. hospital, medical clinic, nursing home, etc.) approaches an allied health staffing company to fill an open shift.
- If it’s a new customer, the factoring firm performs a credit check on the medical facility and if approved, determines a line of credit for that customer.
- The staffing firm provides the medical facility with a temporary employee to fill the shift.
- The agency issues an invoice to the medical facility for the shift, making sure to include the factoring firm’s remittance information directly on the invoice.
- At any time after the invoice has been issued, the allied health company submits a schedule of accounts receivable for purchase to the factoring firm. In addition to the invoice, this schedule also includes any supporting documentation (i.e. signed time-sheets).
- The invoice funding company will contact the staffing agency’s customers from time to time to verify that they are actively using temporary employees from the agency. Upon verification of the invoices, the factor will electronically advance funds within hours.
- Per the remittance information included on the factored invoice, the medical facility sends payments directly to the factoring firm’s lock box.
- Upon receipt of the payment, the factor remits the difference (reserve) between the collected amount and the advance to the agency, less the discount fee.
Selling invoices to a factor improves the agency’s cash flow, allowing business owners to meet payroll, taxes and other monetary obligations in a timely manner. Thanks to this article, allied health staffing business owners are able to easily familiarize themselves with the factoring process. The next step in improving their cash flow is to start researching which allied health staffing factoring firm will best meet their company’s cash flow needs.