A health agency experience an average 150+ days in it's receivables. Would you look to a 90 day or 30 year mortgage fo financing
When considering financing options for a health agency, it's important to understand the difference between a 90-day mortgage and a 30-year mortgage. Let me explain both options to help you make an informed decision.
A 90-day mortgage typically refers to a short-term loan that needs to be repaid within 90 days. This type of financing can be useful for immediate cash flow needs or for bridging a temporary gap in funding. It is not typically used for long-term investments or significant expenses, as the repayment period is short.
On the other hand, a 30-year mortgage is a long-term loan that provides financing for a property or large investment over a 30-year period. This type of financing is commonly used for purchasing real estate, such as buying a building for a health agency. It offers lower monthly payments spread over an extended period, making it more suitable for significant expenses or investments that require long-term financing.
Now, back to your scenario. If the health agency is experiencing an average of 150+ days in receivables, it indicates a delay in receiving payment for services provided. In such a case, it's important to focus on improving the agency's cash flow and managing its accounts receivable effectively. This usually involves measures like optimizing billing processes, implementing efficient payment collection procedures, and ensuring accurate documentation and follow-up.
While considering financing options, it may be more relevant to explore short-term solutions such as a line of credit or working capital loan designed to address receivables gaps. These options can provide the necessary funds to manage daily operations and bridge the financial gap until payments are received.
In summary, when dealing with a high average days in receivables for a health agency, it is essential to prioritize measures that improve cash flow and collection efficiency. Short-term financing solutions may be more appropriate for managing this situation, rather than a mortgage which is usually associated with long-term investments or property purchases.