Using Dental Factoring as a Solution for Delayed Payments
One of the biggest problems that dental offices run into is sufficient cash flow. The reason for this is that patients do not pay invoices in a timely manner. Delayed payments cause the dental office to be short funds to pay employee wages, office bills and other business expenses. In turn, this can result in a failed business that is forced to close its doors. A solution to this problem is for the dental office to use dental factoring.
What is Dental Factoring?
When a business uses dental factoring, it is essentially handing over its bills and invoices to a third party. The dental office will submit an invoice to a factoring company. The company will then pay a portion of the bill immediately. The factoring company is then responsible for collecting the amount due from the patient. When the company receives payment, it will pay the dental office the remainder of the bill less a service charge.
What are the Benefits?
There are many benefits to using a factoring company. First, the dental office can receive a portion of the cash payment immediately. This gives the office the cash it needs to pay employees, office bills and other business expenses. Every business needs cash to stay in business and this is one way that a dental office can keep its doors open.
Another benefit of using dental factoring is that it can actually save time and money. The dental office is not responsible for sending out multiple invoices to patients and attempting to get payment. This can free up an employee and other resources to focus on other business building practices. Reaching out to some patient multiple times asking for payment can also be uncomfortable. By using a factoring company, the dentist and his or her employees can focus on building a positive relationship with all the patients.
Is There a Risk?
Using a factoring company is not like applying for a loan; there is no accumulation of debt while waiting for an invoice to be paid. It is an extremely low risk method for improving a business’s cash flow. Some dental offices have even found that it is an improved method for tracking payments.
There is a wide assortment of reasons that patients do not pay invoices immediately. Whether it is because they are facing financial hardship or they are simply unorganized, a dental bill can go unpaid for an extended period. Dental factoring is one way to receive cash for those delayed payments.