Calculator
Medical receivables factoring cost calculator
Factoring is priced per period, not per year, so the annualized number depends entirely on how long the payer takes. Set the billed balance, the advance rate, and the fee, then move the days outstanding to see the cost change.
Direct answer
Practition Finance publishes this model so a billing operation can see what an advance against submitted claims costs once the payer's timing is included. It converts the billed balance, the advance rate, and the discount fee into cash today, cash at settlement, and an annualized cost.
As of October 2026
Run your numbers
Model the advance
An advance moves a share of a billed balance forward now and charges a discount fee. Move the balance, the advance rate, and the fee.
Claims already submitted, before the payer remits
Charged per invoice, on the face amount
Cash forward at funding
$206,250
An 85% advance on $250,000, net of the discount fee
Discount fee
$6,250
2.5% of the face amount for this cycle
Reserve released on payment
$37,500
The held-back share, returned when the payer remits
Annualized equivalent
20%
Same fee over a 45-day cycle, expressed as an annual rate for comparison
Educational arithmetic on the numbers you entered. It is not a quote, a promise to lend, or an indication of offers to come, and no funder has priced this file. Program availability varies by state.
| Assumption | What the model uses | Why it is set that way |
|---|---|---|
| Eligible balance | Claims submitted and not yet remitted | Unbilled work, self-pay balances, and claims past the payer's timely filing window are commonly excluded from the borrowing base. |
| Advance rate | Applied to net expected collections | A funder advances against what the payer is expected to pay, not against gross charges, so contractual adjustments come out first. |
| Fee basis | Discount fee per period outstanding | The fee accrues while the claim is open, which is why days in accounts receivable drives the cost more than the headline rate. |
| Reserve | Released at settlement, net of the fee | The portion held back returns when the payer remits, so the cash timeline has two steps rather than one. |
| Government payers | Handled through a lockbox arrangement | Medicare and Medicaid receivables cannot be assigned directly, so the structure routes remittances instead of transferring them. |
| Denials | Chargeable back to the practice | A denied or recouped claim commonly comes back out of the next advance, so the denial rate belongs in the cost. |
Educational arithmetic on the numbers entered. It is not a quote, a promise to lend, or // copy-allow an indication of offers to come, and program availability varies by state.
How to read what it gives you
Read the period cost before the annual one
A fee stated per 30 days is the number the funder charges. The annualized figure exists to compare the advance against a line of credit, and it climbs quickly when the payer runs long, which is the point of computing it.
Put your own days in accounts receivable in
Use the aging report rather than a benchmark. A practice at 55 days pays materially more over a year than one at 32 days at the identical fee, and the aging report is the input a funder will use anyway.
Subtract the denial and recoupment drag
Every claim that comes back reduces the effective advance and adds administrative time. Model a realistic denial rate against the balance before treating the advance as available cash.
Compare against the line, not against nothing
The alternative to factoring is usually a receivables line, not a zero-cost outcome. Price both on the same balance and the same days before deciding which structure fits the billing operation.
When the number means it is time to talk to someone
- The payer mix is mostly Medicare or Medicaid and the structure has to route through a lockbox
- Monthly billed volume sits below the floor most funders hold to
- The denial rate is above the benchmark and the cause is a credentialing gap rather than coding
- An existing lender holds a blanket lien on receivables and would have to subordinate
- The cash need is a one-time payroll gap rather than a standing timing mismatch
The figures behind the model
| What it measures | Market range | Confidence | How to read it |
|---|---|---|---|
| Advance rate range | 70% to 95% of net collectible value4 | VerifiedAugust 2026 | The share of an eligible claim commonly advanced at purchase. |
| Discount fee range | 1% to 5% per invoice5 | VerifiedAugust 2026 | The fee charged per period the claim stays open. |
| Monthly volume floor | $35,000 to $500,000 per month, asset-based above $500,000 net realizable value and $600,000 AR6 | VerifiedAugust 2026 | The billed volume most funders want before they open a facility. |
| Days in accounts receivable benchmark | Under 30 high performing, 30 to 40 acceptable, over 50 a problem7 | VerifiedAugust 2026 | The aging benchmark the cost model multiplies against. |
| Denial rate benchmark | Under 5% top quartile, 8% to 10% average8 | VerifiedAugust 2026 | The share of claims that come back, which reduces the effective advance. |
Keep the numbers
Email me this scenario
The page stays open either way. This sends a copy of the inputs you noted, so the numbers are in your inbox when you sit down with an accountant or a partner.
What owners ask about this calculator
01Why does the annualized cost move so much when I change the days?
The fee accrues for every period a claim stays open. At the same 2 percent per 30 days, a balance that settles in 30 days costs half what a balance that settles in 60 days costs across a year. The aging report, not the fee sheet, decides the annual number.
02Can Medicare receivables be factored?
Not by direct assignment. Federal rules prevent assigning the claim itself, so the common structure routes remittances into a controlled account that pays the funder and forwards the balance. The mechanics differ from commercial factoring and belong in the facility documents.
03Is the advance debt?
A purchase of receivables is not a loan, and it is not reported the same way. Some facilities are structured as a receivables line instead, which is debt. Read which one the term sheet describes, because the accounting, the covenants, and the exit differ.
04What happens to a claim that is denied after it was advanced?
It commonly comes back to the practice, either as a chargeback against the next advance or as a repurchase obligation. That is why the denial rate belongs in the cost model rather than in a footnote, and why clean claim performance affects pricing.
05Does Practition Finance set the fee?
No. Practition Finance publishes market ranges with their sources and dates, and refers an inquiry to funding partners. Every fee, advance rate, reserve, and condition comes from the partner that reviews the file and communicates directly with the practice.
Sources
- 1Centers for Medicare & Medicaid Services
- 2Medicare Claims Processing Manual
- 3Medical Group Management Association
- 4Clarify Capital, Crestmont, Factor Finders
- 5MonitorDaily, Crestmont, FactoringExpress
- 6Factor Finders
- 7MGMA and HFMA aligned sources
- 8MGMA-cited
If the advance covers the gap and the payer mix is complicated, send the request for team review