Private healthcare is one of Finland's most significant service sectors. According to THL, private healthcare revenue was EUR 7.1 billion in 2024. Sector companies provide critical services from clinics to physiotherapy, from home care to laboratory services. Yet many healthcare entrepreneurs struggle with cash flow – long public sector payment terms and high personnel costs create constant financial pressure.
Cash Flow Challenges in Healthcare
Cash flow problems in healthcare are multifaceted. Wellbeing services counties, Kela, and insurance companies are reliable payers, but their payment processes are slow and bureaucratic. When an invoice is sent to a wellbeing services county, payment can take 30–60 days – sometimes even longer.
As an entrepreneur, I have seen how this particularly challenges small healthcare companies. An individual physiotherapist or small clinic cannot negotiate payment terms with a wellbeing services county – they are take it or leave it. Meanwhile, rent, salaries, and equipment costs do not wait.
Factors straining healthcare cash flow:
- Wellbeing services county payment terms: 30–60 days, sometimes longer due to bureaucratic delays
- Kela reimbursement processing time: reimbursements can be delayed by weeks
- High personnel costs: nurse and doctor salaries account for 60–70% of revenue
- Equipment investments: medical devices cost thousands or tens of thousands of euros
- Regulatory costs: permits, supervision fees, continuing education, and quality management cost money
- Premises rent: healthcare facilities require special specifications and are expensive
According to the Federation of Finnish Enterprises' social and healthcare entrepreneurship barometer, 48% of private social and healthcare entrepreneurs find public sector payment terms to be a significant hindrance to their business.
Factoring and Invoice Financing in Healthcare
Healthcare is an ideal sector for invoice financing and factoring. The reason is simple: public sector invoices are extremely reliable. Wellbeing services counties, Kela, and government institutions virtually never leave invoices unpaid – they just pay slowly.
This low credit risk means finance companies accept healthcare invoices easily and often at more favorable terms than private sector invoices. In my experience, healthcare companies often receive the best financing terms precisely because their clients are in the public sector.
Example: A Physiotherapy Company's Cash Flow
Imagine a physiotherapy company providing services to a wellbeing services county. Monthly invoicing is EUR 40,000, and the county pays on 45-day terms. Without financing, EUR 60,000 is continuously tied up in receivables. With invoice financing, this capital is freed within 24 hours; the cost is approximately 1–1.5 percent, or EUR 400–600 per month.
Financing public sector invoices is often cheaper than private sector invoices because the credit risk is virtually non-existent. The cost can be as low as 0.5–1.5% of the invoice value.
Healthcare Financing
Tailored financing solutions for healthcare companies – fast, reliable working capital
Financing Equipment Investments
Healthcare equipment is often expensive: an ultrasound machine can cost EUR 20,000–80,000, an X-ray machine over EUR 100,000, and modern treatment tables thousands of euros each. These investments are essential for service quality and competitiveness.
Equipment investment financing options:
- Leasing: Does not tie up capital; monthly payments are predictable. Equipment is returned after the leasing period.
- Hire purchase: Equipment transfers to ownership after the payment period. Suited for long-lasting equipment.
- Finnvera investment loan: Affordable interest rate, suited for larger acquisitions.
- ELY Centre development grant: May cover part of the investment, especially for regionally significant services.
- Invoice financing + own capital: Cash flow freed through invoice financing covers the equity portion.
Personnel Costs and Their Management
In healthcare, personnel costs are by far the largest expense item. According to Statistics Finland, they account for an average of 65 percent of private healthcare companies' revenue. The nursing shortage has driven up salary levels, and recruitment costs have increased significantly.
From a cash flow perspective, managing personnel costs is critical. Salaries must be paid on time – retaining nurses requires a reliable employer. Invoice financing helps ensure that payroll funds are always in the account on time, even when public sector payments are delayed.
Practical Tips for Healthcare Entrepreneurs
Best practices for cash flow management in healthcare:
- Invoice wellbeing services counties as often as possible – monthly or even biweekly
- Use invoice financing for public sector invoices – they get the best terms
- Maintain a 2–3 month cash buffer for unexpected situations
- Finance equipment through leasing – do not tie up working capital in investments
- Automate invoicing and collections – delays in invoicing directly reduce cash flow
- Monitor accounts receivable turnover monthly – react to delays quickly
"Wellbeing services county invoices are reliable but slow. With invoice financing, I can pay my nurses' salaries on time and focus on what matters most – caring for patients."
Summary
Healthcare financing challenges are structural: long public sector payment terms, high personnel costs, and expensive equipment investments constantly strain cash flow. Factoring and invoice financing are ideal solutions because public sector invoices are extremely reliable and offer an excellent financing base. Combined with equipment leasing and proactive cash flow planning, a healthcare company can focus on patient care – not waiting for payments.
📌 Summary
In healthcare, public sector invoices are reliable but slow. Invoice financing frees receivables into working capital within 24 hours; the cost for public sector invoices is often 0.5–1.5%. Personnel costs account for 65% of revenue, making cash flow predictability critical. Equipment investments are best financed through leasing.
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