Healthcare and medical suppliers are growing industries. IBIS World reports that the industry in Australia is worth $137b per year, employs 850 thousand people and boasts a growth rate of 4.6% from 2013-18. This is in stark contrast to a GDP growth rate of less than 1%.
The aging population, technological advances and private health insurance are all contributors to this growth. According to the Sydney Morning Herald’s Matt Wade: “(Growth in the healthcare sector) is a trend that doesn’t grab many headlines. But over the past decade is an industry focused on helping others has quietly become entrenched as Australia’s biggest employer.”
Importantly, many of those working in the sector are employed by small to medium sized entrepreneurial businesses offering everything from medical transcription services, transportation, supplies, labour hire, etc.
So what’s the problem?
Capitalising on growth opportunities in any industry is tricky. It’s a time when cash flow is king – being unable to harness opportunities or keep pace with the competition due to cash flow difficulties can cause stress for any business.
As in most industries, there is a disparity between when you complete the work versus the length of time it takes for your customers to pay your invoices. One report from the US claims that ‘big pharma’ (the major drug companies) regularly push their suppliers out to 75 to 90 days before settling invoices.
Although we don’t have exact figures in Australia, waiting a long time to be paid is, unfairly, commonplace for the health industry. For a supplier or provider the impact is obvious – when your cash flow slows or becomes unpredictable, your ability to increase inventory, hire new staff, open new locations or expand your business comes to a standstill.
What can be done?
Most businesses will have traditionally turned to loans, overdrafts or even credit cards to keep the business moving. However, to qualify for a loan from major institutions you must meet certain criteria – and often personal property will need to be put as collateral for the loan. For some small business operators, this is a slippery slope.
But that’s not invoice financing. Invoice finance is not a loan. It is simply a way to have your invoices paid faster, without the burden of extra debt.
When a healthcare or medical supplies business uses invoice finance, they use an invoice financing company such as Apricity to pay their invoices faster. It is the equivalent of being paid immediately by their customer, minus a fee (in our case, 3% for 30 days). The collateral used is the invoice itself. When the invoice is paid by your customer on time, the ‘debt’ is cleared.
How does invoice finance help healthcare operators and medical suppliers?
Invoice finance brings predictability to your cash flow. By receiving cash upfront for your invoices, you will have the financial means to do the things that matter most to the success of your business: increase inventory, invest in research, hire new staff, travel to investigate new products, deploy marketing strategies, open new locations or set your sights on expansion.
Contact Apricity now to find out if we can help your business.