They are similar but not the same. Both involve the purchase and sale of an organization’s accounts receivable, and neither incurs any debt. While, the process for commercial factoring and medical accounts receivable funding is similar, there are distinct differences:

In MAR funding, since the payor of the claim is Medicare, Medicaid or an insurance company, funding is based on the net collectible amount of the claim taking into account the contractual arrangements between the healthcare provider and each payor. Determining the valuation of the claim requires extensive knowledge of the healthcare industry because payments vary for each payor and for each treatment, product or service provided.

In commercial factoring, funding eligibility is primarily based on the credit and track record of the factored company’s customers.