Waiting on late paying NHS health and social domiciliary care contracts? Don’t worry, invoice finance could potentially bridge the gap for the healthcare sector.
The private care sector is booming as the Government opens up contracts to independent suppliers. However, there is a problem.
The public sector can be notoriously late to pay which means many of their suppliers will find themselves waiting for a paycheque.
If you’re one of them, and in the healthcare sector you might want to look at invoice finance.
- 1 What is Healthcare Factoring?
- 2 Types of Finance for the Healthcare and Care Sector
- 3 How Healthcare Finance works
- 4 Domiciliary Healthcare Funding
- 5 Get a Quotation today for your Health Care Business.
What is Healthcare Factoring?
Healthcare factoring can deliver great beneficial results for any healthcare businesses. The healthcare sector is known for late payments, most are frequently having to wait 60 days or more for payments from a local authority to settle their outstanding invoices. Asset based finance can relieve pressure on your cash flow and alleviate problems by releasing tied up cash in your sales ledger.
This will allow you to pay your staff’s wages, purchase equipment, buy much needed medical supplies and most importantly ensure the patients under your care are looked after.
Late payment is a growing problem for SMEs of all kinds, but it seems to be a particularly severe issue in the public sector. Recent research from the Federation of Small Business found that 90% of public sector suppliers are hit by late payments. Even when they are not, payment terms can be lengthy – often moving beyond 30 and 60 days. This is creating an enormous problem in the public sector supply chain which can put the future of some of the Government’s key contractors at risk, this is why invoice factoring government contracts is a perfect fit.
The FSB is calling for the Government to levy penalties against those departments which pay their suppliers late. Labour has also announced plans to force the public sector to pay its suppliers on time. Even so, you can forgive suppliers for feeling sceptical about waiting on the Government to change its ways.
Types of Finance for the Healthcare and Care Sector
Whether you are already running your own healthcare business in the care home or domiciliary sectors, or simply considering starting up, we can help you find the right type of funding option to help you build your business:
We can help you secure the following types of business finance.
Invoice Factoring – Health care Invoice factoring is when a business sells its invoice to a third-party company. It’s a form of invoice finance and will give your business an effective way to improve its cashflow position.
The healthcare factoring company provides the credit control service to recover payment of the unpaid invoice. Invoice factoring companies allow you to release cash from your unpaid invoices quicker than having to wait between 30 to 90 days – and sometimes up to 120 days – for your customers to pay you.
Invoice Discounting – Invoice discounting for healthcare is an invoice finance facility when a company’s unpaid invoices are used as collateral for a loan. Healthcare discounting companies enable businesses to leverage the value of their sales ledger.
With an invoice discounting company, when sending out invoices to customers a proportion of the total amount becomes available from the lender, which provides your business with a source of working capital throughout the month while you wait for the payment of your invoice to be processed.
The benefit of invoice discounting is you maintain responsibility for your sales ledger as well as your payment chasing and invoice processing. The main difference between this method and invoice factoring is that your customer is not aware that you have taken on cashflow finance. If you prefer to keep the financial arrangement confidential from your customers then invoice discounting may be the right product for you.
You no longer have to wait up to 120 days to receive payment for your goods and services, and you remain in charge of your own credit control processes, meaning that you continue to chase late payments and therefore your customers are not made aware of our involvement.
Business Loans for Healthcare Companies – A business loan for a domiciliary or healthcare company offers you a convenient, low-cost way to finance your business activities. This type of loan can be used for almost any business purpose, such as boosting cash flow, purchasing equipment, recruiting staff and covering unexpected bills.
Small business loans provide a simple, low-cost way to borrow for your healthcare business. You can borrow for working capital, growth or expansion, and you’ll get fixed monthly repayments so you can plan with confidence. Our experienced team and our innovative application process mean you will get a decision on your business loan in as little as five hours, so you can focus on running your business.
With interest rates from 1.8%-7.4% APR, no upfront fee, and no repayments or interest to pay for the first 12 months, small business loans can be much more affordable than a business overdraft or a business credit card. You can also take an unsecured loan without putting down property or assets as a security, and there’s no fee if you want to pay off your loan early in one go.
How Healthcare Finance works
In general, for an invoice financing transaction to happen, there must be a factor, a debtor and an unpaid invoice. The factor is the financial institution that offers or agrees to buy business debt or unpaid invoices. The debtor is the client who owes money to a business in the form of an unpaid invoice. Lastly, the invoice is the document that shows transactions between a business and its clients.
Most invoice factoring companies in the UK pay in two instalments, the first covering the bulk of the receivables. The remaining amount usually 5-10% when your client settles their invoice, minus any factoring fee. A simple process of the invoice factoring agreement are as follows:
1. You deliver your goods or service and invoice your customer as normal.
2. You send us a copy of the invoice (uploaded via our online portal).
3. We make available up to 90% of the invoice value.
4. You decide how much you want to draw and we transfer funds into your bank account, same day.
5. When your customer pays the invoice, the balance (10%) is released to you.
Invoice finance only covers business to business transactions. Each factor will have their own set of conditions that determine whether a business is eligible, so the requirements for obtaining an asset based lending service will vary. Specifically, qualification may depend on the company’s turnover, and requirements will vary from industry to industry.
Domiciliary Healthcare Funding
We know the domiciliary healthcare sector is complex and each business has very different needs. As a result, we work closely with you to understand your business model and your needs to make the financing process as painless as possible and place you with a factoring company which understands you. A secure credit facility will allow you to fulfil contracts, perform your caring duties and invest in the tech and equipment required to provide the best service possible.
The amount of invoice finance available to your domiciliary care business will typically be stated as a percentage of your outstanding debtor book or sales ledger, but may be constrained by specific terms such as limiting exposure to a single large customer, usually the local authority or a NHS Trust.
- Released cash in 24 hours after invoices are raised
- Receive up to 95% of the invoice amount
- Credit control can be fully managed or confidentially kept in-house
- Improves working capital cash flow for your business
- Negotiate better terms with your suppliers
- Bad Debt Protection (BDP) can be added to protect against non-payments
- Debenture taken on company and no personal guarantee
Get a Quotation today for your Health Care Business.
Invoice Funding are one of the UK’s leading Invoice Factoring brokers. Since we have started in 2010 we have sourced Invoice Finance & Factoring for the healthcare sector. Funding has been secured for over 200 healthcare and private ambulance industry sector businesses.
This has ensured that that are able to maintain constant cashflow for their business. If your healthcare sector business feels that an Invoice Factoring Finance facility can support the business, please feel free to complete the online enquiry form
Can Invoice Factoring help my care business
Yes Invoice Factoring can assist any healthcare business with cashflow funding. It will advance cash against your unpaid invoices.
Can you assist if we use a system such as CM 2000 Care System
Yes the CM 2000 System is more water tight than the traditional time sheets used by carers.
Do you fund all Domiciliary Care businesses?
We are happy to fund any business but we only fund contracted work e.g. Council and NHS contracts. We do not fund private service users.