Most businesses undergo hard financial times within the first year of operation, but it can get especially challenging for medical practices. Among the factors that are most to blame is the Affordable Care Act.
Although it’s good that more patients can now access quality medical services, the billing process for the government and insurance companies is cumbersome. Moreover, these entities are typically slow to pay, taking as much as 90 days for you to receive reimbursements.
The revenue many small practices generate is, therefore, hardly enough to meet daily expenses. Luckily, a working capital loan can help you get back on your feet.
Below are a few ways working capital loans can benefit your healthcare business.
- Filling in the gaps
Cash shortages usually come from slow-paying patients and insurers. However, income can be low during certain times of the year, such as the summer, when clients are out on vacation. A loan can help to keep your business running as you modify your schedule for the low season.
- Boosting operations
Steady business growth requires that you take advantage of opportunities and stay ahead of the competition. This means hiring the best staff, acquiring the latest technology and marketing your practice. When it’s flu season, you may need to stock up on flu medication and vaccines. Improving a business often requires an extra infusion of cash, which a working capital loan can provide.
If your practice is at that point in its lifecycle where expansion is the next move, a working capital loan will help you remodel, move to larger premises, open a second location, purchase more medical equipment and bring in more employees. The good thing about using a capital loan to expand is that rather than spending the money, you’ll be investing it in your business.
- Reducing debt
Regardless of how successful your practice is, debts will always find a way to sneak up on you. Maybe your credit card processor needs paying, or you have a small, short-term loan whose maturity date is approaching. Failing to pay debts in time will harm your business credit score. When you can’t keep up on your own, consider a bill consolidation loan, which will give your practice the capital to reduce your debts.
- Disaster management
Sometimes a working capital loan can be a survival measure for unforeseen events. If your facility suffers a disaster of some type or you lose a crucial lawsuit, your business account may not have enough to finance a recovery. A quick capital loan will help to get your business back on track.
When your business is between a rock and a hard place, needs expanding or just a small boost in operations, you can apply for a medical working capital loan and effectively meet your demands. However, ensure you select the right financial resource for your need, and know exactly how much capital is enough. This way, you can invest soundly in the future of your practice.