Medical practice cash flow problems usually come from timing: fixed payroll and rent against insurer and patient payments that arrive weeks later. Cloverglen Finance, a small-business funding broker in Muncie, Indiana, explains how Delaware County practices can measure the gap and when a credit line or working capital loan fits. Lending partners make credit decisions and set rates and terms.
Practices in Delaware County, Indiana carry big payrolls
The county's 71 offices of physicians employed 1,850 people in 2023 with an annual payroll of about $134.6 million. Across all 220 ambulatory health care employers, payroll was about $226.2 million for 3,661 employees (U.S. Census Bureau, County Business Patterns 2023), which works out to roughly $61,800 per employee on average, dividing one figure by the other.
Payroll is the cost that cannot wait. Supplies can sometimes be deferred and some vendors will extend terms; staff are paid on schedule. That is why practice cash flow problems show up first as a payroll problem.
Why revenue and cash drift apart
A practice earns revenue when it sees the patient, but collects the cash later: after the claim is coded and submitted, after the insurer processes it, sometimes after a denial is reworked, and after the patient pays their share. The gap between the two is what a practice is financing, whether it means to or not.
Growth makes it wider. A practice adding a provider pays the new salary immediately and collects on the new provider's work weeks later. So does turnover in billing staff, a payer changing its process, or a slow month for patient payments.
Measure the gap before you borrow
- Pull the accounts receivable aging report and note how much sits beyond 30, 60 and 90 days.
- Work out the typical number of days between a visit and payment, by major payer if possible.
- List fixed outflows for the next 13 weeks: payrolls, rent, loan payments, key supplies.
- Lay expected collections against those outflows week by week.
- The low point of the running balance is the gap.
Often the exercise shows that part of the problem is fixable without funding: claims stuck in denial, patient balances never followed up, a payer that has quietly slowed. Fix those first. Funding sized to a gap that billing could have closed is money you pay interest on for nothing.
What is cash flow lending?
Cash flow lending means funding based mainly on the business's revenue and the regularity of its deposits, rather than on specific collateral such as equipment or property. A business cash flow loan is usually short-term, sized against recent revenue, and repaid on a fixed schedule. For a practice, the partner looks at bank statements, receivables and the payer mix. The partner decides whether the cash flow supports the request.
A line of credit or a working capital loan
| If the gap... | Usually fits | Why |
|---|---|---|
| Comes and goes every month | A line of credit | Draw before payroll, repay when collections land; interest only on what is drawn |
| Is one defined event, such as a new provider's first months | A working capital loan | A known amount for a known period, repaid on schedule |
| Comes from a large purchase | Equipment financing | Keep the line free for timing gaps |
A merchant cash advance is rarely a natural fit for a practice whose revenue comes mainly from insurers rather than card sales, and it is not a loan. Read its total cost carefully if one is offered.
Questions a partner will ask a practice
- How old are the receivables, and how concentrated are they in one or two payers?
- Has collection speed changed recently, and why?
- What existing debt and leases does the practice carry?
- Who owns the practice, and will they guarantee the funding personally?
Having the 13-week view ready answers most of these in one document. The full sequence is on how a request moves, and sector context is on medical and dental practice financing. Other articles are on the blog.
By Cloverglen Finance · Updated