One of the things that surprised us in this business was how much capital a healthcare organization can need while it is waiting to collect money it has already earned.
We have helped hospitals with funding. The issue was not always a lack of activity. Sometimes it was the distance between providing care and receiving payment.
Receivables do not run payroll
A hospital can have substantial accounts receivable and a large team to pay. The receivables may be valuable, but the employees need money in their accounts on payday.
That creates a timing problem. The organization has services to deliver, operating expenses to cover and collections moving on a different schedule.
When we review that situation, we want to understand who owes the money, how long collections normally take and whether the current delay is routine or something more serious. The size of the receivables alone does not answer those questions.
Match the capital to the collection cycle
Short-term funding may help address a temporary gap. A recurring collection issue may call for a different structure, including a receivables-based facility where available.
We also want to look at existing debt and the cash flow available after collections arrive. Catching up this week's payroll should not create a payment schedule that leaves the organization short again next week.
Watch the video
How Healthcare Businesses Use Funding for Payroll, Equipment & Growth | Tree of Life Funding
Let’s talk about your business
Healthcare owners and operators should be able to explain the operating need without reducing the entire business to a delayed deposit. Tell Tree of Life Funding what is happening with your collections at treeoflifefunding.com/apply. We can review the timing, documentation and available options.