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As commercial lines of credit and business loans get harder and harder to qualify for, many medium and small medical practices and healthcare businesses are turning to medical factoring to help alleviate their slow cash flow.

If you are new to practice or are just looking to change your current location, consider the following leasing pros and cons to help you make your decision.

You pay less up-front cash. Because of mortgage down payments and closing costs, buying a space is more expensive at the outset; leasing leaves you with more start-up. cash flow to put unto your practice. With leasing, there is also no risk of investment loss that comes with the ever-changing real estate market.

Medical factoring presents an interesting financing alternative. It provides you with financing that is tied to your insurance claims. If you file more claims this month than last month, your financing goes up accordingly. It provides you with predictable cash flow, ensuring that you are able to meet your office expenses. You’ll have predictable money to pay rent, meet payroll and invest in growth.

You can reduce your payments and tax paperwork: lease payments are a valid tax-deductible business operating expense, and leasing requires significantly less paperwork at tax time than owning.

If the lease period is too long, you could be locked into an agreement for an office that no longer serves your purpose. Leasing never builds up equity.

Although qualifying for factoring is relatively simple, most financing companies will only work with medical offices that have net collectibles of at least $50,000. Terms usually get better as the practice grows. Medical practices, testing centers and medical supply companies that have over $200,000 a month in net collectibles are in the best position to get the best terms. This is because insurance payment processing can be very complex and there are a number of efficiencies that can be realized with high volumes.

Medical office factoring has some advantages over other financial products. The most important is that the financing is recurring and happens every time you invoice an insurance company. This makes it a cash on demand product. As opposed to loans and lines of credit, the factoring line has flexible limits. As a matter of fact, the limits are based on your ability to invoice, making it an ideal growth tool. Lastly, doctor office factoring is easy to qualify for and the personal credit of the practice owners is usually not involved in the financing decision.