Most medical practices tend to suffer from the same challenges, all of which are related to operational costs. It seems that every year, physicians, dentists and other medical professionals are faced with higher expenses and an increasingly unstable cash flow system. In order to pay their bills and maintain the necessary resources for serving patients, medical practices must make extra efforts to spend their money as wisely as possibly and keep sufficient funds on hand. But for many practices, basic strategies like cutting expenses are not enough to produce the kind of working capital their operations require at certain points of the year. This is where small business loans for medical practices come into play, at least for those who have accepted they need to make some serious changes to their business model.
With the right small business loan, medical practices can make virtually every element of their day-to-day routine less stressful while increasing profitability simultaneously. Here are a few common challenges of medical practices followed by the most sensible solutions available today:
1. Buy As Needed
In other industries, businesses are often advised to buy supplies in bulk well before they actually plan on using them. This tactic might save medical practices a considerable amount of money in the long-run. But only for certain types of orders. A great deal of medical supplies have an extremely short shelf-life. Buying more than you thought you would need and then having to throw them away could result in the complete opposite of the intended effect. One example is vaccines, which cost some practices tens of thousands of dollars a year. What you want to do is buy in bulk when demand is high, like during back-to-school season. When demand is low, you order less.
Buying medical supplies as needed, however, doesn’t appear to be a viable option due to several uncontrollable circumstances. The cost would likely be higher than buying off-season, and you already have plenty of other substantial expenses to worry about at the beginning of the busy season. Covering those expenses is difficult enough considering the busy season usually follows a slower, low-revenue period. And even if you could get approved for a small business loan, the application would have to be virtually seamless and you’d need the money right away.
2. Secure The Tools To Act Quickly
Companies like United Capital Source offer a number of solutions to this dilemma. At the top of the list is a business line of credit, which is a fabulous tool for financing short-term investments. A business line of credit is cheapest when there is a smaller gap between spending the borrowed money and paying it off. You could essentially order the supplies and then pay off the brunt of the debt with the revenue that comes in from your back-to-school patients shortly after.
Another option is a merchant cash advance, since doctors’ offices are known to perform a high volume of debit and credit card transactions. United Capital Source is among the only companies capable of approving this type of working capital loan in just 24-48 hours. You’d make larger payments when demand is high and dramatically smaller payments when it dies down or gets a little rocky throughout the following months. The fees from the financing would likely be offset by the money you’d be saving from only ordering as much supplies as your appointment schedule demands.
3. Equipment Financing
Technology is a blessing and a curse for medical practices. Some pieces of equipment are so vital that practices are legally required to use them. This includes advanced medical technology as well as office equipment. It’s the practice’s responsibility to come up with the money to afford these massive expenses. Not only can United Capital Source approve equipment financing in a matter of days, but we can also adjust your terms to accommodate industry-related circumstances, like seasonality or other sudden expenses piling up at once. Advanced equipment is supposed to save you money, but it could take months for this to actually happen, and you shouldn’t have to make absurdly high payments during that initial period.
4. Accounts Receivable Factoring
The rise of high-deductible insurance plans has made doctors more proactive in collecting from patients. They might make more of an effort to inform patients about collection policies or offer more payment plan options that allow patients to pay their bills over time. As helpful as these strategies may be, they still don’t prevent practices from waiting for payments. Practices have bills of their own and must therefore shorten their business cycles. So, instead of hopelessly trying to make patients pay quicker, you might want to look into accounts receivable factoring.
Selling insurance invoices to a business lender basically guarantees that you’ll be paid just days after serving a patient. In addition to not having to repeatedly follow up with the provider, you can offer patients an increasingly flexible payment plan. This has the potential to bring in a tremendous amount of new business, since flexible payment plans aren’t exactly easy to find these days.
Which One To Tackle First?
Since most medical practices are likely all-too-familiar with these challenges, you could say that the real issue is figuring out which one to tackle first, or which one deserves the biggest investment. The business financing experts at United Capital Source are happy to help you answer this question, as long as you provide all the information required for doing so. With the right business loan at the right time, you can afford all of the aforementioned strategies without compromising day-to-day operations, including your ability to serve as many patients as possible.