Healthcare Staffing Factoring: Funding Clinician Payroll While Facilities Pay

Healthcare staffing has the same payroll gap as other staffing, and facilities often take longer to pay. Travel and per diem nurses, allied health professionals and contract therapists are paid weekly. The hospitals, health systems, nursing homes and care facilities that use them often pay on 45, 60 or 90 day terms. Every new facility contract adds payroll right away and revenue weeks later.

Factoring closes that gap. You invoice the facility for approved shifts, sell the invoice to Sigma, and receive most of it the same day. The facility pays Sigma on its usual terms, and Sigma releases the rest to you, minus the fee.

What Qualifies: Shifts Billed to a Facility

Factoring works when your customer is a business that owes you for work already done. In healthcare staffing, that’s an invoice to a hospital, health system, clinic, nursing home, assisted living community or other care facility.

• Travel nursing. Contract assignments billed to the facility, usually weekly.
• Per diem and local contract staffing. Shift-based nursing and CNA placements.
• Allied health. Radiology, lab, respiratory, surgical and pharmacy technicians, and other allied placements.
• Contract therapy. Physical, occupational and speech therapy staffing billed to a skilled nursing facility or hospital under a services agreement.
• Locum tenens. Physician and advanced practice coverage billed to the facility.

W-2 and 1099 clinicians both qualify. Direct-hire placement fees generally aren’t factored, because the fee depends on the hire staying through a guarantee period.

What Sigma Doesn’t Fund

Claims paid by health insurers, Medicare or Medicaid, and patient balances. Sigma only funds invoices billed to healthcare businesses. A home health agency billing Medicare, or a practice waiting on insurance reimbursement, needs a medical-claims lender, not invoice factoring.

What matters is who owes the money. A staffing firm that bills a hospital for a nurse’s shifts can factor that invoice, even though the hospital later bills insurers for the patient’s care. The hospital owes the staffing firm, and that’s the invoice Sigma buys.

Proof of Hours: Facility Approval, Not Signed Timesheets

You need the facility’s approval of the hours. A signed timesheet isn’t required. Many hospitals and health systems approve shifts and invoices in a managed service provider (MSP) or vendor management system (VMS) portal. When they do, we verify the approved invoice there and fund it. That’s often faster than chasing signatures from a unit manager.

If you work through an MSP, the MSP may pay you instead of the facility. The question is still whether that payer will pay the invoice.

A Worked Example on Net 60

Here’s one week of shifts at a hospital that pays on Net 60. The figures are hypothetical, not an offer, and they use our capital estimator’s healthcare figures.

Your clinicians work 300 hours at a $100 bill rate, and you pay them $70 an hour.

Without funding, an agency staffing this contract would carry about eight weekly payrolls, around $168,000 in wages plus taxes, before the hospital’s first payment arrived. With funding, each week’s invoice covers that week’s payroll, and the gap doesn’t grow as you add clinicians.

What It Costs

Your agreement sets a fee schedule by payment period. The fee is calculated on the full invoice amount and comes out of the reserve when the facility pays, so you don’t pay it up front. There are no setup fees, wire fees or monthly minimums.

Payment terms matter more in healthcare than in most industries, because facilities vary so much. On the same $30,000 invoice:

Compare the fee with your margin. In the example, the spread between the bill rate and wages is $9,000 before payroll taxes and other burden, and funding the invoice for 60 days costs $1,470. Our guide to invoice factoring costs shows how to compare quotes from different factors in dollars.

Recourse and Credit Insurance

Sigma factors with recourse. If a facility never pays an invoice, you replace it or buy it back. Optional credit insurance covers a facility that doesn’t pay, under the policy’s terms. It doesn’t cover a dispute over the work itself, such as hours the facility says weren’t worked.

Sigma doesn’t offer non-recourse factoring. It costs more and usually covers only a customer’s bankruptcy or insolvency. Our guide to recourse vs. non-recourse factoring explains the difference with a worked example.

How to Compare Healthcare Staffing Factoring Companies

For the documents we ask for and a seven-item readiness checklist, see our staffing factoring page. For how weekly payroll funding works in any staffing business, see our guide to payroll funding for staffing agencies.

Vendors That Bill Facilities

The same rules apply to businesses that supply hospitals and care facilities rather than staff them. Medical equipment and supplies, linen and laundry, food service, environmental services, security and IT invoices billed to a facility can qualify. The question is still whether the facility will pay the invoice.

Getting Started

1. Onboard once. Sign the agreement, send your formation documents and a voided check, and list the facilities you plan to factor. Onboarding typically takes 24 to 48 hours. We review your business without a hard credit pull, and we don’t pull owners’ personal credit reports or scores. Your facilities’ payment records carry the most weight.
2. Bill approved shifts. Invoice the facility and send its approval of the hours.
3. Receive the advance. Sigma verifies the invoice and sends the advance to your business account the same day.
4. The facility pays Sigma. Each facility receives a Notice of Assignment telling its accounts payable team to pay Sigma. It keeps receiving your invoices and pays on its usual terms.
5. Reserve released. Once facility payments build a reserve balance, Sigma releases it to you on request, minus the fee.

New agencies can sign before their first invoice. We generally look for invoice volume to reach at least $50,000 a month as the agency grows. That’s a growth expectation, not a condition of signing.

Questions About Healthcare Staffing Factoring

Can I factor invoices for travel nurses?

Yes. Travel nursing invoices billed to a hospital or health system qualify, whether your nurses are W-2 or 1099.

Will the hospital know I factor my invoices?

Yes. A Notice of Assignment asks the facility to send payments to Sigma. Hospital and MSP accounts payable teams handle these notices routinely.

Do you fund home health or hospice agencies?

Only invoices billed to a business, such as a facility that contracts for your services. Bills paid by Medicare, Medicaid, insurers or patients don’t qualify.

What if a facility disputes hours?

We work with you to resolve it. We handle a dispute about the work itself case by case, and credit insurance doesn’t cover disputed work. Getting hours approved before you invoice prevents most disputes.

Can I fund only my slow-paying facilities?

Yes. You can submit invoices for the facilities you choose. Many agencies fund their 60 and 90 day payers and leave quick payers out.

How soon can I see pricing?

Within 48 hours of your request, you get a proposal with your advance, fee schedule and terms, and you don’t have to sign it. Get a proposal, or take the five-question fit assessment first.