For healthcare businesses, the consequences of missing payroll are steep. Top-quality, truly caring healthcare workers are in high demand and hard to come by, and even one staff member who leaves because of payroll issues is one too many.
What can medical and healthcare practices do to ensure smooth, stress-free payroll — without the burden of long-term debt?
In this article we’ll talk about:
Your healthcare business — like NPOs — relies heavily on payouts from outside, often federal organizations. Payouts from Medicare and Medicaid are slow, and private insurance companies aren’t always faster. Other complicating factors include changes in minimum wage requirements and fluctuating labor and equipment costs.
None of these factors are related to your business’s success, yet they all create problems when you need to pay employees on time.
One solution is a business line of credit.
There are three major eligibility requirements your healthcare business or medical practice needs to meet:
Not necessarily. There are other reasons lenders might deny healthcare professionals a business line of credit:
You’re registered as an NPO, not an LLC. If you’re registered as a non-profit organization, then you enjoy tax-exempt status. While that’s a huge advantage, LLCs have a lot more flexibility accessing financial options — including business lines of credit. NPOs are typically regarded as higher risk, and more likely to to be denied funding.
You’re lacking a solid business plan. No matter who your lender is, they’ll want to feel confident that your business knows where it’s going. A comprehensive business plan demonstrates viability and lets lenders see your financial projections, as well as how you manage risk.
There’s no relationship between your business and the lending institution. Nurturing a relationship between your business and your loan officer is crucial. When loan officers feel they know you well, they’re a lot more willing to go to the mat for you.
Lack of collateral. In certain cases like medical loans, lenders will need collateral in order to approve your healthcare business for a line of credit.
Fortunately, you have other, sometimes better, options for payroll financing besides a business line of credit.
There’s a world of alternative payroll solutions out there beyond the traditional business line of credit.
By exploring options like payment arrangements, invoice factoring, payroll financing, and government assistance, your healthcare business will be able to keep payroll running smoothly and employees paid on time.
Morris Reichman is the founder and CEO of Payro Finance. Former Vice President at Infinity Capital Funding an alternative finance company, Morris possesses a versatile background in the finance industry. Having spent 7+ years working across global macro operations and start up corporate finance Morris's expertise is in business accounting, risk management and investment analysis. Morris founded Payro Finance to support business owners and ensure their business continuity.