The Best Guide to Medical Invoice Factoring

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No doubt you’re familiar with the challenge of waiting months to get invoices paid if you work in healthcare or in a business that serves the healthcare industry. Given the intricacies of each company’s unique billing requirements, government regulations, and Medicaid or Medicare receivables standards, it’s little wonder invoices can take months to be paid! Unfortunately, too many payment delays can leave healthcare providers struggling to cover operating costs.

Big and small health-related businesses can benefit from medical invoice factoring, also called medical receivables factoring, healthcare factoring, or just simply medical factoring. With invoice factoring for small businesses in the health industry, healthcare professionals can enjoy the benefit of consistent cash flow, and have the ability to cover any cash flow gaps, simplify accounts receivable, and fuel growth – just by getting invoices paid in days.

What is Medical Invoice Factoring?

U.S. hospitals have some of the highest operating costs of any industry, a whopping $1,112,207,387,000, in 2020¹, and that doesn’t take into consideration smaller medical providers and clinics. Unfortunately, one of the biggest challenges for most healthcare companies is the time it takes for invoices to be paid — often between 90 and 120 days. 

Medical invoice factoring, also called medical receivables financing, turns invoices from third-party payers (Medicare/Medicaid, HMOs, private insurance companies, workman’s compensation insurance, etc.), into immediate capital.

Home healthcare , hospitals, eye doctors, dentists, pharmacies, and other health-related industries can all benefit from the cash flow boost that medical invoice factoring provides.

Factoring refers to a factoring company purchasing accounts receivables at a discount from a provider. The factoring company sends money to the medical provider for the unpaid invoices, called an advance. The billed party then pays the factoring company according to the net terms of the invoice.

Important facts about medical invoice factoring:

  • It is not a loan.
  • It provides quick and convenient access to funding.
  • It removes the time spent collecting payment from slow-paying customers.
  • It is a practical solution to improve or maintain positive cash flow.


There are two types of medical factoring services:

  • Medical Invoice Factoring. For health-related providers that rely on insurance claims.
  • Healthcare Invoice Factoring. For vendors and service providers that offer goods and services to healthcare facilities.

Medical Factoring vs. Healthcare Invoice Factoring

Although medical factoring and healthcare invoice factoring are often used interchangeably, they are different.

Medical Factoring addresses the needs of physicians, dentists, eye doctors, medical specialists, and other health care providers who provide direct care to patients, but risk cash flow issues from slow-paying third-party payers. These payers might include Medicare and Medicaid, the government, HMOs/PPOs, and private insurance carriers. It’s also called medical receivable funding, medical receivable factoring, or medical account receivable financing.

Healthcare invoice factoring provides funding to commercial vendors and service providers that provide goods and services to the medical industry. This might include medical staffing agencies, medical supply companies, IT companies, transcription services, and medical coding companies. It’s also called healthcare receivables financing.

Pharmacy Factoring: How to Bridge Cash Flow Gaps

For independent pharmacies, medical invoice factoring – or in this case, pharmacy factoring – can be a real lifeline in terms of bridging any cash flow gaps and covering operating expenses. Pharmacies are often processing hundreds of claims each day, meaning they can have thousands (if not millions!) of dollars of unpaid invoices at any given time.


On top of that, they still need to purchase supplies such as life-saving medications, pay staff such as pharmacists and technicians, and other business expenses. Staying on top of cash flow is essential to keeping their important work running smoothly. By factoring outstanding invoices and unpaid insurance claims, independent pharmacies can ensure they always have the necessary cash on hand.


Especially for independent pharmacies who might not have access to traditional funding sources like a franchise pharmacy would, the ease of application and less strict qualification requirements of pharmacy invoice funding make it an ideal funding source to bridge cash flow gaps or simply have enough cash on hand to cover operating expenses.

How does Medical Factoring Work

FundThrough provides unlimited working capital based on the size of your outstanding customer invoices. AI and automation make getting funded convenient and quick. It’s a straightforward process.

How FundThrough’s medical invoice factoring service works:

  1. Medical providers or those servicing medical providers send invoices to their customers.
  2. The invoicing company can then submit outstanding invoices through the FundThrough platform for fast payment.
  3. FundThrough advances the full value (minus a small fee) in days. 
  4. FundThrough waits for invoices to be paid by your customer(s) while you put your funding to work. 

Which Companies Can Use Medical Invoice Factoring or Financing?

Medical invoice factoring can be used by any healthcare provider that works with private insurers or government insurance programs. Companies may include:

  • Hospitals
  • Medical offices
  • Clinics
  • Dentists
  • Assisted living facilities and nursing homes
  • Private physicians offices
  • Medical supply companies
  • Pharmacies
  • Surgery facilities
  • Mental health providers
  • Ambulance providers
  • Medical staffing agencies
  • Surgery centers
  • Diagnostic imaging centers and MRI clinics
  • Medical labs
  • Physical therapy facilities
  • Small businesses that educate people on health-care related topics
  • And more.

Healthcare factoring is also for vendors that rely on payments from healthcare providers, including:

  • Medical equipment suppliers
  • Transcription providers
  • IT companies
  • Medical coding companies
  • Transcription companies
  • And more.

The Main Problems Medical Factoring Solves

One of the biggest challenges in the healthcare industry is managing cash flow, because invoices from insurance companies are often paid after months of waiting. Very few claims are paid quickly.

Payroll, equipment, and operating expenses must still be paid on time. And most healthcare businesses (especially those growing quickly!) can’t wait for Medicare, Medicaid, or private insurance companies to pay according to lengthy net terms.

On top of reducing the waiting time to get paid by 97% (according to FundThrough’s 2020 customer data), medical factoring with FundThrough gives you:

  • Flexible, fast funding. Only fund the invoices you want, when you want, for a funding boost any time. See a deposit in your business bank account in days.
  • Convenient access to working capital. AI, automation, and integrations with accounting platforms make it easy to get funded.
  • 100% advance rates, no hidden fees. See our pricing page for details.
  • Debt-free, non-dilutive funding with no long-term commitments after the invoice is paid.
  • No bank hassles. Factoring is a sensible funding solution for businesses that are new, can’t wait to raise a line of credit limit, or had the bank deny their request.
  • A partner dedicated to your success that treats your customers professionally. (See how we work with your customers.)

Self Care Catalysts (SCC) partnered with FundThrough to accelerate its cash flow, making it possible for SCC to pay various fixed costs and keep up with their billion-dollar healthcare clients. SCC clients include pharmaceutical manufacturers, hospital systems, academic institutions, and clinical research organizations.

Advantages of Medical Invoice Factoring

Besides the problems that medical invoice factoring solves, the advantages are plenty:


  • You are in control of which invoices to fund.
  • Factoring is not a loan, so there’s no interest, repayment, or debt.
  • It helps maintain cash flow, so you can grow your business.
  • Unlimited funding potential.
  • Faster, easier funding than banks
  • Non-dilutive funding: retain the equity in your business.

Am I Qualified for Medical Factoring?

Qualifying for medical factoring with FundThrough can be easier than qualifying for a loan or line of credit. Plus, it doesn’t rely on your credit score or time in business. But, you’ll need to meet certain requirements.

  • You must operate a business that works with other businesses (B2B).
  • Invoices must be for a completed claim.
  • Invoices must be less than 90 days old.

When your medical business is growing fast, but cash flow is tight, FundThrough offers the best factoring solution for your funding needs. See our full list of qualifications and get started.

Medical Factoring Companies and Healthcare Factoring Companies: What to Look For

When partnering with a medical factoring company or healthcare factoring company, there are a few important points to consider:

Industry Experience: If a factoring company has already funded healthcare companies in the past, working with you will be easier. They will know the intricate ins and outs, saving you the hassle of having to explain multiple details specific to medical or healthcare transactions.

Speed and Efficiency: Many factoring companies still use manual, paper-based processes, leading to a slow and expensive process. Look for a company that uses technology and automation to save yourself time and effort in getting funded. That’s what invoice factoring is supposed to deliver in the first place!

Fee Transparency: All factoring companies charge a funding fee that could range from 1% to 5% per 30 days. But they don’t all tell you about hidden fees – like service fees, sign-up fees, or annual fees – that can leave you with less of your invoice than you thought. See FundThrough’s pricing here.

Advance Rate: This refers to the percentage of the invoice amount that the factor is willing to give you upfront. Many factoring companies only have advance rates of 80%. With FundThrough, you get the entire invoice value, less the factoring fee, upfront.

Partner in Your Success: This should be a given, but it’s often not. Whoever you choose should be invested in your long-term success. At FundThrough, that means finding solutions to help you get funded, dedicated account management, and treating your customer like our own.

Fortunately, when your small business is growing fast, but cash flow is tight, FundThrough offers the best factoring solution to fit your funding needs.

Medical Invoice Factoring FAQs

Your questions answered.

When you factor an invoice, you are essentially selling your unpaid invoices to a factoring company—FundThrough. In return, you receive an advance, which allows you access to working capital. The remaining balance is paid to you when FundThrough receives payment from your customer.

Factoring, also called invoice factoring, is when a domestic company receives an advance against unpaid accounts receivables.

Forfeiting is a type of international trade financing. It deals primarily with medium- to long-term accounts receivables and is a financing option used by exporters to receive 100% financing based on exported goods’ value.

No, medical invoice factoring is not a loan.  It is instead an advance on your unpaid accounts receivables. Your credit does not matter, and your credit score will not be impacted when you factor invoices.

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