How To Grow Your Medical Transcription Service With Invoice Financing
Medical transcription is a field that has been growing immensely for the last decade or so. Companies within in the medical transcription service industry, especially experienced ones, are often able to secure lots of business.
However, whether a company is just starting out or is quite established, money, particularly cash flow, can become a problem from time-to-time. With little money, it can be very difficult to experience to grow ones business. One very good to remedy to low cash stores is invoice financing.
Invoice financing is a very good way for companies, both new and old, to raise capital. It involves them leveraging their existing business for money. Instead of taking out a loan, they are able to earn money from the customers they already have. In order to go forward with this very good, commercial financing option, a business will need to have outstanding invoices from clients with very good credit.
Invoice financing, also known as invoice factoring, requires that a company work with a Factor. This Factor will purchase the company’s outstanding invoices at a discounted rate. This rate typically ranges somewhere between 70% and 90%. For example, if a company is owed invoices from their clients that total $100,000, a Factor may be willing to pay $80,000 or 80% of the outstanding amount.
After the factor pays for the invoices, they will focus on collecting those invoices. All prior payment arrangements made between a business and their clients will remain the same and the Factor will abide by them.
After all monies have been collected, they will be returned to the original owner of the invoices. Subtracted from this amount is the money already paid for the invoices and any applicable fees.
Invoice factoring is an excellent financing method for a medical transcription service ready for growth. It allows them to expand and take on new business without depleting any of their cash stores. Companies can instead utilize their outstanding invoices to raise cash. Rather then waiting the standard 30 to 40 days that they would normally have to in order to get paid, they are able to secure monies upfront and then not even worry about collections. The factor will handle this for them.
Invoice financing allows medical transcription companies with customers that have good credit and outstanding invoices to sell those for fast cash, which they can use for growth.