Regardless of what industry pundits say, opening a medical practice can be both very rewarding and very lucrative. Of course, as with any business, medical offices have their own specific financial challenges. One of the biggest challenges for medical practices of all sizes is adjusting to the long payment cycles of private insurance providers and Medicare/Medicaid.

Although many medical practices can still qualify for a business loan or line of credit, many are finding that traditional banking products don’t always solve their cash flow concerns in the long term. Why? Well, traditional business loans have to be paid within a few years and lines of credit have fixed maximum limits.

Basically, neither product is very flexible and both are hard to get, unless you run a medium sized medical practice.

Property management is provided by the owner. This allows you to negotiate maintenance and repair, know the monthly and annual expenditures in advance, and focus more on your clients.If you find you need more (or les) space down the road, you can easily walk away from the leased office space at the end of the term and relocate.

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.

If your small medical practice has slow cash flow but good growth prospects, then factoring may be the tool to help you finance your growth.