How do I check a nursing agency’s receivables before buying?

Nursing agencies carry a cash gap. Nurses are paid after each shift or each pay period, while facilities pay the agency later. The money owed by facilities is therefore a large part of what the business holds, and it shows how well the agency bills and collects. A buyer should look at it closely, and facility by facility rather than as one total.

Aging by facility

Ask for a list of unpaid invoices grouped by facility and by how long each has been outstanding. Some facilities pay promptly and some always lag. Note which are which. Then ask whether the slow ones are slow because of process or because of a dispute. A single large old balance from one facility deserves its own conversation with the owner.

Timesheets and shift approvals

Invoices rest on timesheets, and facilities often must approve them. Pick a sample of invoices and trace each back to the approved timesheet and the nurse’s pay. Ask how often a facility disputes hours, and who resolves it. If approvals live in one person’s inbox, that is a handover risk. See also how bill and pay rates are checked.

Who keeps them at closing

Buyers often negotiate whether they take the receivables, and what happens to ones that never get paid, as well as the nurses’ pay owing at closing, since the agency will owe it before the facility pays. These terms and the tax treatment are for your lawyer and accountant. Raise them early, because they change how much cash you need on day one.