Nurse Staffing Agency Financing
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Fact-checked by: Bruce Sayer
How do nurse staffing agencies get funding?
Running a nurse staffing company is no easy task. Even the most well-managed nurse staffing agencies find payroll, rapid growth, and similar challenges complicated issues to deal with. Scheduling, federal and state staffing regulations, patient acuity, and balancing nurse-patient ratios all impact the bottom line. Having readily available working capital on hand makes it easier to balance these requirements and ensure profitability.
One of the most effective methods to secure nurse staffing agency financing is through medical staffing factoring. This specialized form of accounts receivable factoring is the practice of selling invoice receivables at a discount in exchange for immediate payment.
Medical staffing factoring is a fast, safe and affordable way for the nursing staffing industry to meet their business needs by providing easy access to working capital. The huge benefit of a factoring facility is that it provides nurse staffing agencies immediate payment on invoice receivables compared to typically waiting 30 to 60 days for customers to pay.
Medical staffing factoring provides convenient funding, plus A/R management services and comprehensive credit protection. These benefits all add up to ensure that running a nurse staffing company is much less complicated.
Serving a wide range of nurse staffing segments
Medical staffing factoring serves a wide range of nurse staffing segments. These include, but not limited to:
- General Nurse Practitioners (NP) and Family Nurse Practitioners (FNP)
- Travel or Traveling Nurses
- Registered Nurses (RN) and Licensed Practical Nurses (LPN)
- Home Care Registered Nurses
- Locum Tenens Physicians
- Private Duty Nurses
- Temporary Nurses
- Certified Registered Nurse Anesthetists (CRNA)
- Clinical Nurse Specialists (CNS)
- Pediatric Nurses
- School Nurses
- Government and Public Agency Nurses
An example case of medical staffing factoring
Your nurse staffing agency has an outstanding invoice for $100,000 from a creditworthy customer. The problem is that this customer has been given payment terms of 45 days to secure their business. This lengthy payment structure places stress on your cash flow, which could negatively impact payroll. However, since you are a staffing service-based company with good and creditworthy customers, you can turn to a factoring company that specializes in medical staffing factoring for immediate payment. By factoring receivables, you get up to 90% advance on the face value of invoices transferred directly to your account.
Most of your expenses are in payroll, but other significant costs must be paid as well. Medical staffing factoring is a flexible financing solution with minimal loan covenants. This flexibility provides positive cash flow without restrictions on how funds can be utilized. With funds received within 24 hours of submitting invoices, your agency is ensured to have the working capital available to pay your temp nurses, payroll taxes, SUTA, FUTA and workman’s comp premiums.
How does medical staffing factoring work?
Medical staffing factoring is very easy to manage. Here’s how it works:
- Invoice your customer and send a copy of the invoice to your factoring company.
- The factoring company verifies the invoice to ensure services were provided and the invoice is accurate. Advance payment, up to 90% of the invoice face value, is transferred directly to your account within 24 hours. A small fee is deducted and the remaining amount is held as a reserve until your customer pays the invoice in full to the factoring company.
- When the invoice is paid, the reserve is lifted and transferred directly to your account.
All transactions are recorded in real time and available to view 24/7 through your online client portal for full transparency. The big payoff is – the more your business grows, the more you get paid. Invoice factoring is the only funding option that grows with your staffing business. This feature allows you to take on new customers and grow your staffing pool knowing that your access to working capital increases as your business grows.
Conclusion
Nurse staffing agencies face unique challenges that require reliable access to working capital to ensure smooth operations and financial stability. Medical staffing factoring emerges as a highly effective financing solution, providing immediate payment on outstanding invoices and allowing agencies to focus on growth without cash flow constraints. By partnering with a factoring company, nurse staffing agencies can streamline their financial processes, manage payroll and expenses effectively, and position themselves for expansion in a competitive market. As the demand for healthcare services continues to rise, leveraging such innovative financing options will be crucial for agencies aiming to thrive and adapt to the evolving landscape.
Key Takeaways
- Nurse staffing agencies face unique challenges that require reliable access to working capital to ensure smooth operations and financial stability.
- One of the most effective methods to secure financing is through medical staffing factoring.
- Medical staffing factoring provides convenient funding, plus A/R management services and comprehensive credit protection.
- As the demand for healthcare services continues to rise, leveraging such innovative financing options will be crucial for agencies aiming to thrive and adapt to the evolving landscape.
ABOUT eCapital
Since 2006, eCapital has been on a mission to change the way small to medium sized businesses access the funding they need to reach their goals. We know that to survive and thrive, businesses need financial flexibility to quickly respond to challenges and take advantage of opportunities, all in real time. Companies today need innovation guided by experience to unlock the potential of their assets to give better, faster access to the capital they require.
We’ve answered the call and have built a team of over 600 experts in asset evaluation, batch processing, customer support and fintech solutions. Together, we have created a funding model that features rapid approvals and processing, 24/7 access to funds and the freedom to use the money wherever and whenever it’s needed. This is the future of business funding, and it’s available today, at eCapital.
Steven Silver
Overseeing the business development team, Steven is responsible for originating, underwriting, and executing senior secured revolving, term loans, and bridge loans for eCapital Healthcare portfolios.
Prior to joining eCapital Healthcare, Steven was Product Head of the General Industries and Asset Based Lending Group for MidCap Financial, and President and Founder of Auto Finance Partners, LLC, a national sub-prime auto lender. In addition, he also served as Chief Marketing Officer of Capital Source Inc., and Executive Vice President of GE Healthcare Commercial Finance and its predecessors, responsible for leading originations.
Steven holds the designation of Certified Public Accountant and earned a Bachelor of Science degree from the University at Albany.