by Alleon Capital on 06/21/16 at 11:37 am
Ben here, today I want to talk about how pharmacies tend to benefit from accounts receivable financing. We just closed a loan with a pharmacy so it’s fresh in my head, and I wanted to make this video. There are two main ways pharmacies benefit from accounts receivable financing. One is the same way that every other provider benefits from it, which is improving cash flow. If it takes 30 days for the pharmacy to get paid once they deliver the medication, and they can get an advance on that receivable within one or two days. So the cash flow is expedited and they get to stabilize their cash flow.
The second thing, which is the more interesting part of this, and pharmacies tend to benefit from this more than traditional medical providers is that a lot of pharmacies get discounts from their suppliers if they pay early. For instance, the client we just closed a deal with got a 1% discount if they paid on delivery. Now, our cost of funding is around 1.25%, so not only is the pharmacy getting the benefit of cash flow improvement, but also the cost of the capital is being offset by the discount from the supplier. It’s almost free money, or very cheap money, and they have a line or credit backing them for growth, cash flow stabliliztion, or whatever they need to use to funds for.
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