Follow the lead of Amazon and Square by bringing financing to your customers

Follow the lead of Amazon and Square by bringing financing to your customers

Retail giants Amazon and Square have utilized their unique positions processing money for their small business clients to grow significant loan businesses.  These lending operations have increased earnings for the companies and increased their importance to customers that are using their core services.  There is a clear path for healthcare Practice Management Systems and Revenue Cycle Management companies to follow and do the same for their customers.

Amazon has made a loan program available to the sellers on their platform, and it has been a big hit.  The outstanding balance on this program has grown rapidly, from $337MM at end of 2015 to $661MM at end of 2016 – an increase of 196%.  A promotional video from the company declared “we wanted to bring the same one click shopping experience to the lending program” and further that “our process is literarily three fields and three clicks”.

By utilizing Amazon’s data on the businesses sales, they are able to target business that might need a loan and do qualify.  Amazon also uses a company’s sales through the platform for repayment of the loan, reducing their credit exposure significantly.  Amazon typically takes a fixed repayment amount out of the seller’s revenue on the Amazon platform.  According to fundera, Amazon offers amounts from $1,000 to $800,000, with terms from 3-18 months.   Rates are typically around 14% for a 6 month loan term through Amazon.

Square Capital runs a similar program for businesses on their platform.  Square touts that “your small business loan is deposited into your bank account as soon as the next business day”. They further state that you “repay your loan with a fixed percentage of your daily card sales” on the Square platform.  Like Amazon, Square has the advantage of significant data on a business’s revenues and the ability to take repayment out of their cash flows on the platform.  According to industry periodical deBanked, Square originated nearly $800MM in small business loans in 2016, with quarterly growth rates exceeding 20%.

Healthcare companies such as Practice Management Systems (PMS) and Revenue Cycle Management (RCM) companies are well positioned to follow the example set by Amazon and Square in this area.  With the key data on the revenues and claims activity of their clients, PMS/RCM groups can identify clients that meet minimum financing criteria, and they can also find customers that are going through change events that might trigger the need for funding.  Big changes, up or down, in claims booked or received are often good predictors of the capital requirements for a business.  By partnering with Provider Web Capital, the leading finance company for healthcare small businesses, a PMS/RCM group can put themselves in position to add value for their clients and increase their own bottom line.  Contact us today at (855) 860-9700 to learn more.

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