How Medical Supplies Firms Can Benefit from Factoring
Now more than ever, medical supplies companies are looking for alternative financing sources. Banks are not approving loans like they used to and recurring cash flow challenges for medical supplies companies are not going away. Medical supplies factoring has been evaluated in the past, but this alternative financing option is becoming a popular and convenient solution to cash flow problems.
Most medical supplies companies do not receive payments for their goods until weeks after they have been delivered. In fact, a common cycle occurs when medical supplies companies need to order additional products to ship out to their customers before they have been paid by those same customers. By factoring their receivables, medical supplies companies can improve their cash flow tremendously, giving them enough cash to buy new inventory regardless of when their customers pay.
Factoring is Not a Bank Loan
Factoring offers a huge advantage for medical supplies companies because unlike a bank, the factor's main concern is the credit rating of the customer who is responsible for paying the invoice. In addition, the only collateral used by the factor is the receivable, whereas a bank would often require personal collateral to secure a loan. Also, many of factoring firms do not require long-term commitment. Therefore, a medical supplies company can factor its receivables for as long as it likes.
Factoring Promotes Business Growth
Another advantage of factoring is that it alleviates the hassles of the collections process. Once the medical supplies company sells the receivable, the collection process can be handled by the factor. Medical supplies companies don't have to worry about making collections calls, following up on skipped invoices or hunting down missing documents. This saves time and money and allows companies to allocate resources to more important day-to-day operations of the business.
Factoring is Easier to Find than a Bank Loan
There are thousands of factoring firms to choose from, so finding a company that will factor medical supplies accounts receivables is easier than ever. For example, type ‘medical supplies factoring' into a search engine, and a slew of factoring companies will show up in the results. While there are many factoring companies to choose from, they differ on a large scale. Some may serve an array of industries, while other only factor invoices for a specific industry. Some operate nationally, while some focus their attention in one geographic region. Of course, there will also be many different advance rates and factoring fees amongst factoring firms.
With the current economic climate, it's likely that more medical supplies companies will turn to factoring firms for financing. It allows start-up companies to develop and helps veteran companies continue to thrive.