Medical Transcription Services Expand With Accounts Receivable Financing

 By: Lanette Tucker
One field that has been growing dramatically over the last decade is medical transcription. Medical transcription services, especially seasoned companies, are able to secure many new business opportunities that have not existed until the last couple of years.

That being said, apart from whether medical transcription services are new or established, cash flow can still become a problem. Without proper funding, it can become quite difficult to grow a business, such as a medical transcription service. A great way to alleviate such problems is to generate capital via accounts receivable financing.

Accounts receivable factoring or financing is an excellent way for any type of company, young or old, large or small, to secure funding. Accounts receivable factoring allows medical transcription services to utilize their existing business as collateral for funding. Rather than pursuing traditional means of financing, such as a bank loan, medical transcription services can earn money from customers they already have, as long as the medical transcription service has outstanding invoices from clients with a good credit rating.

Accounts receivable factoring typically requires that a given medical transcription service works with what is known as a "factor". The Factor will purchase the service's outstanding invoices at a slightly discounted rate, typically between 70 and 90% of the invoices' written value. For example, if a medical transcription service has outstanding invoices totaling $200,000, a factor might pay 80%, or $160,000 up front.

After the Factor advances funds from the service's invoices, they will move towards collecting on the invoices from the service's customers, abiding by the original payment agreements made between the service's customer and the service itself. Then, after collection, the Factor will return the difference in funding to the service, minus any germane fees.

Medical transcription services are sure to find that accounts receivable factoring is the perfect financing method for their needs: it allows medical transcription services to expand naturally, taking on new business ventures. Rather than relying on their cash-on-hand, medical transcription services can leverage their existing invoices to raise this essential cash immediately, instead than waiting the standard 30+ days for other financing options. In addition, medical transcription services no longer have to worry about collections - the Factor will take care of all of this.

Accounts receivable financing will prove to be a good match for any medical transcription service, as long as their customers or clients have good credit, and the service has outstanding invoices, enabling the business to grow easily.
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