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Waiting on insurance payments? Learn how Canadian healthcare businesses can finance payroll, rent and supplies while claims and receivables clear.
A clinic can have a full appointment schedule and still face a cash shortage.
Payroll, rent, supplies and equipment payments are due on fixed dates. Private insurance and other third-party payments may arrive later, especially when claims require additional processing or correction.
Healthcare businesses in Canada can potentially use working capital loans or lines of credit to cover payroll, rent, supplies and other operating costs while legitimate insurance receivables are outstanding. Approval depends on cash flow, payer mix, bank activity, existing debt, credit and how quickly claims are expected to convert into cash.
The cash-flow problem occurs when a clinic has provided services but has not yet received all of the related cash.
This article primarily applies to private and third-party health benefit receivables. Depending on the practice and benefit plan, a clinic may direct bill, collect from the patient and have the patient seek reimbursement, or receive revenue through several different payment channels.
That can affect dental clinics, physiotherapy practices, chiropractic clinics, mental health practices, optometry businesses and other operators in Canada's medical, dental and health wellness sector.
Provincial health-plan billing should be treated separately. A physician waiting for provincial fee-for-service remittances does not necessarily have the same receivable structure as a physiotherapy clinic submitting claims to private benefit plans.
The first step is therefore identifying who actually owes the money.
A clinic should know how much is due from insurers or benefit administrators, how much is patient responsibility, how much has been submitted, and how much may still require additional information before it can be collected.
Potentially. Working capital can help bridge operating expenses while the practice waits for earned revenue to reach the bank account.
Common expenses can include payroll, practitioner payments, rent, utilities, clinical supplies, administrative staff, software, insurance premiums and other normal overhead.
A working capital loan may make sense when the practice has a defined cash shortage and wants a set amount with a scheduled repayment structure.
For example, a clinic may know that approximately $60,000 is needed to carry payroll and operating costs through the next six weeks.
That is different from borrowing vaguely because "insurance payments are slow."
Credit should be able to see the gap.
The stronger explanation is:
"The practice has $105,000 of submitted third-party receivables outstanding. We require $45,000 to cover payroll and operating expenses before expected collections arrive."
The financing does not make the insurance claim collectible.
It simply provides liquidity during the period between providing care and collecting the related revenue.
Profit and cash timing are different. A clinic can earn revenue today but receive some of the money later.
Private health benefits are a significant part of Canada's healthcare economy.
The Canadian Life and Health Insurance Association reported that 27 million Canadians were covered by health benefits and insurers paid $53.3 billion in total health claims in 2024. Those claims included prescription drugs, dental, vision and paramedical services. (CLHIA)
A busy clinic can therefore process a large number of benefit-related transactions.
But expenses do not wait for every claim to finish processing.
Consider a physiotherapy practice that pays therapists and administrative staff every two weeks. Its landlord collects rent on the first of the month. Software subscriptions and other operating expenses are automatically debited.
If part of the month's revenue remains in accounts receivable, the income statement may look healthy while the operating account feels tight.
This issue can become more noticeable during growth.
Adding another practitioner increases payroll almost immediately. The extra practitioner may also generate more revenue, but the cash from those additional appointments does not necessarily arrive on the same day the practice incurs the associated labour cost.
Payment timing can vary because not every claim moves from submission to cash without another step.
Depending on the insurer, benefit plan and service, a claim may require confirmation of eligibility, supporting information or correction before the final amount is paid.
A practice can also experience delays when patient information is incorrect, coverage limits have been reached, coordination with another benefit plan is required, or the amount approved differs from what the clinic initially expected.
The practical lesson is not to assume every submitted dollar is immediately collectible.
Separate receivables into useful categories.
Know what has been submitted, what has been approved, what requires action, what has been denied or adjusted, and what has become unusually old.
That distinction becomes important when financing is being requested.
A $150,000 accounts receivable balance made up mostly of recently submitted claims is different from $150,000 where a large portion has remained unresolved for months.
Credit wants to understand the quality and timing of the receivables, not merely the total number.
Many Canadian outpatient healthcare businesses are genuinely small operations, so relatively modest collection delays can materially affect liquidity.
ISED's Canadian Industry Statistics reported 105,632 employer establishments in ambulatory health care services in 2025. Of those businesses, 71% had fewer than five employees. (ISED Canada)
A clinic with four employees does not necessarily have a large treasury department or several months of excess operating cash.
A delayed $25,000 or $50,000 of collections can therefore affect payroll, rent or supplier payments even when the practice itself remains economically sound.
This is also why a financing request should be proportionate.
A small physiotherapy clinic with a temporary $40,000 receivable gap does not automatically need $200,000 of debt.
The amount should be based on the peak cash shortage, not on the highest amount the business believes it might qualify for.
Credit is primarily trying to determine whether the practice can repay the financing even if collections arrive more slowly than expected.
Recent bank activity matters.
A reviewer may compare monthly deposits with the revenue shown in the financial statements. Consistent deposits, reasonable cash balances and limited NSF activity generally produce a clearer cash-flow story than an account that is repeatedly overdrawn.
Operating history matters too.
An established dental office with five years of collection data can demonstrate normal payer timing and seasonal patterns. A new multidisciplinary clinic has less historical information, so current collections, owner experience and available cash become more important.
Credit can also consider existing equipment loans, lease obligations, business debt, owner credit and commercial credit reporting where available.
Payer concentration deserves attention.
If 70% of a clinic's receivables depend on one payment source, a disruption affecting that source can have a larger effect than when revenue is diversified across private pay, several insurers and other payment channels.
The underwriting question is straightforward:
If collections are slower than management expects, can the practice still make the new payment?
A good financing package shows current cash flow, the outstanding receivable position and the exact operating need without including unnecessary patient information.
A practical package can include:
Keep patient privacy in mind.
A financing file normally needs business-level financial evidence, not patient charts or unnecessary personal health information. Provide only information legitimately required for the commercial review, and use an appropriate secure process if sensitive information is ever specifically required.
The purpose of the receivable aging is to prove cash timing.
It is not to expose clinical details.
Use a term loan for a defined cash shortage. Consider revolving credit when the same collection gap repeatedly appears and disappears.
Suppose a clinic experienced a one-time processing disruption that left $70,000 more receivables outstanding than normal.
A fixed working capital loan may provide the defined amount needed to stabilize operations.
Now consider a dental practice that experiences the same cycle every month.
Payroll is paid. Supplies are purchased. Patients are treated. Claims are submitted. Cash arrives later. Then the process repeats.
That is a revolving working-capital need.
A business line of credit may fit that pattern better because an approved practice can draw funds when needed, repay the balance as collections arrive and reuse available credit subject to the agreement.
ISED's 2025 Credit Conditions Survey found that 45% of intended small-business debt financing was for working or operating capital, making it the largest reported use of debt financing in the survey. (ISED Canada)
The product still needs to fit the duration of the problem.
Do not finance a recurring 30-day collection gap with years of unnecessary term debt if a revolving structure is available and appropriate.
Possibly in some structures, but healthcare insurance receivables should not automatically be treated like ordinary commercial invoices.
Traditional invoice factoring often involves assigning a valid B2B invoice owed by another business.
Healthcare claims can involve different payer rules, benefit contracts, privacy considerations and assignment restrictions.
That means a clinic should verify whether its specific receivables are eligible before assuming that ordinary invoice factoring will work.
For some practices, the cleaner solution may be a general working capital loan or line of credit supported by the clinic's overall cash flow.
If receivables-based financing is being considered, clarify exactly what is being financed.
Is the receivable owed directly to the clinic? Has the service already been provided? Is the claim valid and undisputed? Can the payment legally and operationally be directed under the proposed financing structure?
Those questions should be answered before relying on the receivable as the repayment mechanism.
Calculate the actual peak cash deficit and preserve a reasonable operating reserve. Do not borrow the entire accounts receivable balance simply because it exists.
Consider an illustrative Ontario rehabilitation clinic.
It has approximately $110,000 of private insurance and other third-party receivables outstanding.
During the next 30 days, the clinic expects:
Payroll of $62,000.
Rent and utilities of $17,000.
Clinical supplies and administrative expenses of $11,000.
Total near-term cash requirement is $90,000.
The business has $60,000 available in its operating account but wants to maintain at least $20,000 as a minimum reserve.
Only $40,000 is therefore available for the upcoming obligations.
The estimated financing gap is:
$90,000 minus $40,000 = $50,000.
Assume purely for illustration that the clinic considers a $50,000 amortizing loan over 12 months at a 12% nominal annual rate.
The estimated monthly payment would be approximately $4,442.
The 12% assumption is not a rate quote or financing offer. Actual rates, fees, repayment frequency and terms depend on credit approval and current market conditions.
If the clinic normally generates $12,000 per month of cash available for debt service and already pays $3,000 toward existing business debt, the illustrative new payment would bring total debt service to about $7,442.
That leaves approximately $4,558 of monthly cushion.
If the clinic only has $7,500 available before debt payments, the same financing would be much tighter.
At this decision point, use Mehmi Financial Group's business loan calculator to test the payment against a conservative month.
If this $50,000 collection gap occurs continuously rather than once, compare a revolving facility before committing to a 12-month term loan.
Financing is a weak solution when the real problem is uncollectible revenue or a practice that does not generate enough operating margin.
Warning signs include receivables getting older every month, a large number of rejected or disputed claims, payroll continually exceeding sustainable collections, existing loans already falling behind or borrowing being used every month simply to repay earlier borrowing.
A business loan cannot make a denied claim valid.
It cannot create benefit coverage that does not exist.
It also cannot repair an operating model where staffing and occupancy costs consistently exceed the cash generated by patient services.
The practice should separate timing problems from profitability problems.
If the clinic normally collects its revenue but needs several additional weeks, financing may help.
If a significant part of the receivable balance will never be collected, borrowing against the assumption that it will arrive creates a second problem.
Show the reviewer exactly how claims turn into deposits and how the requested financing fits into that cycle.
Start with a clean accounts receivable aging report and recent bank statements.
Compare submitted claims with actual historical collections rather than assuming the full submitted amount will be paid.
Explain unusual events.
If a software conversion temporarily slowed claim processing, document when it happened and whether normal collections have resumed. If one insurer required corrected information, explain the amount affected rather than allowing the reviewer to assume the entire receivable book is delayed.
Separate long-term purchases from short-term working capital.
If the clinic also needs a $150,000 diagnostic device, consider financing the equipment separately rather than consuming cash that is needed for payroll.
Mehmi's existing guide to medical equipment financing for clinics and dentists explains how equipment and operating capital can be structured separately.
Most importantly, request the amount actually needed.
A clear $50,000 bridge supported by receivables and current cash flow can tell a much stronger credit story than an unexplained $200,000 working-capital request.
Potentially. Outstanding insurance receivables can explain a temporary cash-flow gap, but credit will still review the practice's overall repayment capacity. Prepare recent business bank statements, a clean receivable aging report, existing debt information and evidence that the outstanding claims represent legitimate expected collections rather than unresolved or uncollectible balances.
Potentially. Payroll is a normal operating expense that can be supported by working capital financing, subject to the agreement. The practice should show how long the payroll gap is expected to last and demonstrate that normal collections can support both future payroll and the new financing payment.
A line of credit can fit better when the gap repeatedly appears and disappears as claims are submitted and paid. A term loan may be more appropriate for a one-time interruption or defined cash requirement. Compare the repayment structure, total cost and how frequently the practice expects to use the funds.
No. Submitted value and collectible value are not always identical. A clinic should separate recently submitted claims from amounts requiring correction, additional information or further review. Financing should be based on conservative expected collections rather than assuming every submitted dollar will arrive on the original timeline.
Potentially. Newer clinics have less collection history, so owner experience, actual recent deposits, personal credit, existing patient activity and available cash reserves can become more important. A newer practice should avoid relying solely on projected insurance payments that have not yet been demonstrated through actual operating history.
Recent complete business bank statements are commonly requested for working-capital financing, and additional history may be needed depending on the amount, practice age and cash-flow pattern. Statements help verify collections, existing payments, average balances and banking conduct. Larger requests may also require current interim and year-end financial statements.
Timing depends on the requested amount, practice profile and completeness of the application. A file containing current bank statements, receivable aging, existing debt and a specific use-of-funds explanation can generally be reviewed more efficiently than a vague request based only on total insurance claims. Funding remains subject to approval and conditions.
Healthcare business financing can be useful when a clinic has earned revenue waiting to become cash and needs to keep payroll, rent and supplies current in the meantime.
Before applying, separate collectible receivables from unresolved claims, calculate the peak cash shortage and test the proposed payment against slower-than-expected collections.
For healthcare business loans while waiting for insurance payments in Canada, call Mehmi Financial Group at 833-863-4644 or submit your request through the Mehmi Financial Group contact page. Financing is subject to credit approval, documentation and current market conditions.
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