What is the Best Financing Option for Outsourced Medical Coding Companies?

Account Receivable Factoring or Small Business Loan:
Which is a Better Financing Option for Outsourced Medical Coding Companies?

Comparing and contrasting medical coding account receivable factoring to a loan from a bank sounds like a daunting task. To be honest, it’s hard to compare the two equally because one financing mechanism creates debt by lending money (i.e. bank loan), whereas the other one creates immediate cash flow by advancing cash on purchased invoices (i.e. factoring).

Thankfully, comparing the two medical coding funding options doesn’t have to be difficult. Here is a handy comparison chart outlining the key differences between medical coding account receivable factoring and bank financing:


Bank Loan

Account Receivable Factoring

Length of Time in Business

Minimum of 3-5 years

Start-ups are welcome


Necessary Documents

Business Plan

Current Business Financial Statement


3 yrs Business  Financial Statements

1-2 yrs Business Tax Returns


3 yrs Business Tax Returns

Current Invoice Aging Report


3 yrs Personal Tax Returns

Current Accounts Payable Report


Current Personal Finance Statement


Underwriting requirements

Good personal credit and good business credit

Selling to creditworthy customers



Personal and/or business assets

Medical Coding Accounts Receivable


Approval Time Period

Weeks to months

3-5 business days


Effects on Balance Sheet

Debt created



Ability to Borrow

Fixed loan amount or line of credit

Line of capital grows as company grows


Additional Services


Check Credit of New Customers


Statement Processing


A/R Management


Merchant Payment Services

As you can see from the above chart, medical coding account receivable factoring eliminates many of the difficult-to-meet criteria of a traditional bank loan. It’s an especially good financing option to consider now because it’s become increasingly more difficult to qualify for a traditional small business loan. Ultimately, outsourced medical coding business owners have to decide for themselves which is the best financing fit.