The Best Guide to Medical Invoice Factoring

Get paid in days through a quick, convenient process

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?

Recently, the American healthcare system’s expenditures were staggering, reaching an estimated $4.5 trillion. Not far behind, Canadian healthcare spending was projected to hit $344 billion in 2023. Amid these towering figures, healthcare providers face a universal challenge: the drawn out delay in invoice payments, often stretching between 90 to 120 days, particularly in the United States.

Medical invoice factoring, or medical receivables financing, can offer this industry a strategic financial lifeline. This process converts outstanding invoices to third-party payers (in the USA)—such as Medicare, Medicaid, HMOs, private insurance companies, and workers’ compensation insurance—into immediate working capital. It’s a practical solution widely adopted across the healthcare industry, from home healthcare services to hospitals, eye care centers, dental practices, pharmacies, and beyond–like companies that serve healthcare practices.
Here’s how it works: a factoring company purchasing a healthcare provider’s accounts receivable at a discount. The provider receives an advance payment for the unpaid invoices, providing them with working capital. The responsibility of collecting the payment then shifts from the healthcare provider to the factoring company; the organization who the provider is billing pays the invoice to the factoring company  according to the original invoice terms.

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.

Solving Payment Challenges in Healthcare with Medical Factoring

If you’re in the healthcare or related business sectors, the extended wait times for invoice payments might be all too familiar a challenge. The complex web of individual medical billing requirements, stringent government regulations, and the specifics of Medicaid or Medicare receivables standards are just a few reasons why invoices can take an age to settle. These delays can leave healthcare providers in a bind, struggling to keep up with essential operating expenses.

If you’re in the healthcare field, you might be familiar with some of these challenges that have a considerable impact on cash flow:

  • Delayed Insurance Reimbursements: Long waiting periods for insurance company reimbursements can severely impact cash flow, with some claims taking months to be processed and paid.
  • Complex Billing Processes: The medical industry’s billing systems are often antiquated and complex, leading to inefficiencies and delays in payment processing.
  • Insurance Claim Disputes and Denials: Disputes over insurance claims and frequent denials add another layer of delay and complexity to receiving payments.
  • Regulatory and Bureaucratic Hurdles: Navigating the myriad of regulations and bureaucratic procedures in healthcare can slow down the payment process significantly.
  • Operational Costs: Immediate costs such as payroll, equipment procurement, and other operational expenses continue to accrue, irrespective of payment delays.
  • Inconsistent Cash Flow from Variable Patient Volumes: The fluctuating nature of patient volumes can lead to unpredictable cash flow, making financial planning challenging.


Both large and small organizations within the health-related business space stand to gain from what’s known as medical invoice factoring, also referred to as medical receivables factoring, healthcare factoring, or simply medical factoring. This financial strategy offers a lifeline for consistent cash flow, providing the means to fill any cash flow gaps, simplify the accounts receivable process, and drive growth – all by ensuring that invoices are paid in a matter of days.

By turning to medical factoring, healthcare providers can sidestep these challenges, converting outstanding invoices into immediate capital. This not only reduces the waiting time to get paid significantly (up to 97% according to FundThrough’s 2020 customer data) but also provides a reliable financial buffer that allows for continuous operation and growth, even in the face of the industry’s inherent payment obstacles.

Ready to explore invoice factoring for your medical practice or healthcare business?

How FundThrough Improves Cash Flow for Healthcare Businesses 

FundThrough offers a few unique advantages compared to other factoring companies:

  • Flexible spot factoring: Only fund the invoices you want, when you want, for a funding boost any time. No obligation to fund invoices.
  • Unlimited funding: No worries about hitting a limit; get as much funding as you have in eligible outstanding invoices. 
  • 100% advance rates: We advance you 100% of the invoice value less one flat fee.
  • No hidden fees: Pay one flat fee for each funding – that’s it. 
  • Quick capital: See a deposit in your business bank account in days; our platform uses AI and automations to speed up processes other companies have to do manually.
  • Convenient integration with QuickBooks: Pull in your eligible invoices from QuickBooks Online for a seamless experience.
  • Debt-free, non-dilutive funding: Get working capital without incurring debt or giving up control of your company.
  • No bank hassles: Factoring is a sensible funding solution for businesses that are new, can’t wait months to raise a line of credit limit, or had the bank deny their request.
  • Partnered success: A partner dedicated to your success that treats your customers professionally. Learn how we work with your customers.

How does Medical Factoring Work?

FundThrough provides unlimited working capital based on the size of your outstanding customer invoices. This process is designed to be straightforward and fast, leveraging AI technology to provide healthcare providers and their service companies with the working capital they need, based on their outstanding invoices. 

How FundThrough’s medical invoice factoring service works:

1. Issue Invoice: Healthcare providers or businesses servicing the medical industry issue invoices for services rendered or goods provided.

2. Request Funding: Submit these outstanding invoices to FundThrough via our intuitive online platform. This step is made effortless, whether you’re manually uploading your invoices or connecting your account through seamless integrations with accounting software like QuickBooks or OpenInvoice.

3. Get Funded: Upon submission, FundThrough reviews the invoices and your customer and, once approved, advances the full amount to you, the healthcare provider or business, less a transparent fee, often within just a few days. This immediate infusion of cash allows businesses to address their financial needs without delay, whether it’s for payroll, purchasing supplies, or investing in new technology.

4. Customer Repayment: The final step in the process involves the original invoiced customer paying the outstanding amount directly to FundThrough, according to the agreed net terms. This step closes the loop on the transaction, allowing the healthcare provider to remain focused on their core operations without worrying about the collection process.

Fund your first invoice through a seamless process

Medical Receivables Factoring Use Cases

Medical receivables factoring offers a lifeline to healthcare providers and adjacent businesses, ensuring they have the necessary funding to not only maintain but also grow their operations. This financial tool is particularly valuable in an industry where cutting-edge technology and high-quality care are paramount, but cash flow can often be unpredictable. Here are some of the key reasons medical offices and healthcare-related businesses might turn to factoring:

  • Growth and Expansion: Healthcare facilities looking to expand their services or footprint need capital. Factoring provides the immediate cash flow necessary to invest in new locations, services, or technology, driving growth without the wait.
  • Investing in Advanced Medical Equipment: With medical technology evolving rapidly, staying updated is crucial. Factoring can finance the acquisition of state-of-the-art medical equipment, ensuring patients receive the best care.
  • Supplies and Inventory Management: Keeping a well-stocked inventory of medical supplies is essential for uninterrupted service. Immediate funding from factoring can help manage inventory effectively, covering the costs of pharmaceuticals, personal protective equipment, and other necessary supplies.
  • Payroll and Staffing: Reliable cash flow is critical for meeting payroll obligations on time, especially in an industry that relies heavily on skilled professionals. Factoring ensures that healthcare providers can maintain their staffing levels without interruption.
  • Emergency Preparedness: In healthcare, being prepared for the unexpected is vital. Whether it’s a natural disaster or a sudden increase in patient volume, factoring provides the quick access to funds needed to respond effectively.
  • Regulatory Compliance and Training: Staying compliant with ever-changing healthcare regulations requires ongoing training and system updates. Factoring can help cover these costs, ensuring that healthcare providers remain compliant and their staff is well-trained.

    By leveraging medical receivables factoring, healthcare providers and businesses in the healthcare realm can face the financial challenges unique to the industry, ensuring they continue to provide top-notch care while also pursuing growth and innovation.

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.

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.

Fund your first invoice with a dedicated partner

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.

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
  • 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.

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.

Our Approach to Working with Different Industries

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.

Quick, Easy Medical Invoice Factoring

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