All about dental factoring
A business is just a business and so a company, no matter which one it is, must also see that the liquidity is permanently right. This is a prerequisite for the existence of a business. Unpaid customer invoices or even complete payment defaults can cause severe and serious economic problems – and this is also and especially true for physicians in private practice.
Unfortunately, there are always customers who are not in a hurry to pay their invoices. This is not only annoying for a company, but it can also put it in dire straits. This is often the case with dental technicians and dental laboratories. Here above all the unpaid invoices can quickly mean the end for small businesses.
In this special area the dental factoring can eliminate the possible risk.
What is dental factoring??
In order to minimize the risk of non-payment and to counteract this, it is possible for the dental laboratory to transfer its outstanding receivables from the dentists to a special company, a factor, by means of so-called dental factoring. Here individual invoices or also monthly collective statements can be submitted.
In the case of the factor, it is then the case that the factor normally transfers the invoice amounts to the account of the dental laboratory within 24 hours and takes over the collection of the receivables.
Factoring is already a popular and common business practice today. Basically, dental laboratory factoring is a sale of receivables. The company (dental technician or dental laboratory) sells its open invoices to the factor or also to a factoring company. In this area, however, there are still various components.
These are for example the del credere. This is the assumption of a guarantee for the solvency of the respective debtor by the factor. If the customer can not pay at the end, the factor bears the sole risk.
What are the possible advantages of dental factoring?
Factoring is already used by many companies from various industries, because this way liquidity can be increased (even without a loan). As a creditor, you have the money immediately and do not have to wait longer until invoices are actually paid.
With this good liquidity the ratio for the equity can be increased and the creditworthiness rises. The enterprise has so much rather a balanced balance sheet.
Factoring is a valuable protection against total non-payment by the debtor. There is no loss of receivables, because the factor takes over the default. With factoring, there are no dunning costs and you do not have to employ extra staff to take care of the invoices and reminders.
Further information on this topic can be found at http://www.lvg.en/dental-factoring.html for more information.
Accounts receivable accounting can also fall under the services of dental factoring. In this area, among other things, the creditworthiness of the customer is also checked again and again. Dunning and also the collection are also parts of this accounting. The creditor has the advantage of no longer having to send reminders.
Also no collection agency is needed, which collects the open demands. All this is done by the factor. Here the tasks of the factor and the collection company overlap – more about this can also be read here.
Special features of the dental technique
What the dental technician performs is precision work. In this process every piece, which was produced in a dental laboratory, becomes a unique specimen. The special thing is that if this work (it can be, for example, a bridge or crown made especially for one person) is not paid for, it cannot be easily resold to another customer either.
The dental technician can now consider whether he should simply throw away what he has produced in a time-consuming manner. However, if he works with the reliable dental factoring provider, this danger does not exist for him in the form.
All the advantages briefly mentioned once again:
- Guarantee that the bills will be paid reliably,
- an improved credit rating,
- The liquidity of the dental laboratory,
- the risk of failure is eliminated.
How does the process work?
The process is actually quite simple. First, the dental laboratory/dental technician delivers his work to the dentist, who in turn adjusts it at the patient‘s place. Then the dental laboratory sends an invoice to the dentist. Now it would be necessary to wait for this invoice to be paid on time, which unfortunately does not always happen.
Thus it can come to a not insignificant loss of earnings. But if the demands are passed on, the bills are paid quickly and the liquidity remains. The dentist has to pay the bill on the agreed date and transfer the money to the factor. Thus a „Win-win situation“ for all sides develops.