Managing Revenue and Working Capital to Avoid Factoring in Health Orga Essay - 1

Managing Revenue and Working Capital to Avoid Factoring in Health plaque - Essay ExampleAnother risk is that when debtors default in paying their invoices on the stipulated date the hospital risks paying more interest to the factoring company which was not budgeted for. Lack of proper management of workings capital and revenue inflow tycoon lead to the business getting to a attitude of insolvency. Creditors to the wellness judicature big businessman be claiming from the organization more than the assets of the organization which might lead to bankruptcy. This might rag week the image of the organization and lead to poor performance of the credit rating of the hospital. Banks and other financial organization will refuse to extend any loan to the hospital in future date which might cripple the organization when a acquire for capital arises in future dates. When the wellness organization gets into this situation it will lack the liquid capital to grow, pay suppliers or meet une xpected costs deep down the health unit. Some of the measures that the finance officer has to take into consideration to avoid such situations areThe health organization will need to balance between acquisition of assets and payment of its recurrent expenditure deal salaries and wages. The moderate form of working capital policy would suit the health center to avoid situations of the need of having to look for short-term debts to pay for its current and long-term assets. This policy will do away with risks that germ with the aggressive policy of working capital where short-term debts will be needed to finance repair or permanent working capital. The fluctuating working capital will be financed through short-term borrowing. This situation will eliminate a situation of financing all the working capital need from short-term loans which may lead to factoring within the health unit (Nowicki, 2011).The health organization might be expanding or buying long-term assets like medical equ ipment.Buying of these assets will lead to enormous cash outflows which will affect the availability of cash to meet other expenditures.