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  • Writer's pictureAshley Van Rosmalen

Why Should Healthcare Practices Consolidate Their Finances in 2023?

Updated: Mar 3, 2023

Broker in person appointment to consolidate clients finance debts

The term ‘consolidation’ carries various meanings depending on the context or field with which the term is associated.

At its core, consolidation means combining a series of things into a more effective whole thing, making something more manageable and robust.

In the world of finance, consolidation and refinance are often used as interchangeable terms, but in fact, consolidation is slightly different from refinancing. It can be confusing to know which is which, especially if the terms are used in the wrong context, ultimately leading the customer to misinterpret the meaning potentially.

In this article, we will explore financial consolidation and why healthcare practices should consider consolidating your finances sooner rather than later.

What is Financial Consolidation?

Consolidation in finance is when multiple loans are combined into a single loan. A borrower then takes out a new loan to clear any existing debt, and repayments are made to the new loan.

Instead of balancing multiple loans simultaneously, everything is rolled into one, making repayments and managing your debt more streamlined.

Debt consolidation is like pressing the reset button when businesses accumulate multiple streams of debt over time and create opportunities to make repayments over a single repayment rather than multiple repayments that may be charging various amounts during the repayment lifecycle.

start of the refinance process

How Does Refinancing Differ from Consolidation?

Refinancing is when a new loan is taken to repay an existing loan. By restructuring your loan, you benefit from lower payments, reduced loan terms, and a more manageable repayment structure.

What sets refinancing apart from consolidation is that refinancing is more applicable when you only have one debt to be restructured. Consolidation takes many individual debts and seeks to roll them into one manageable debt.

Sound confusing? We want to clear up the difference as both terms are used interchangeably and often need clarification, so let’s dig deeper into consolidation and focus on the pros and cons to see if consolidation works for you and your business.

Pros of Consolidating

Management of Debt

Imagine juggling three or four lines of credit. Loans are taken out at different points, and attracting interest repayments could get messy. Consolidating takes the hassle out of making repayments at different points in time. It combines your debt into one payment, meaning you can control your expenses better.

Reducing the rate of Interest

If you have high-interest-rate loans, consolidating them may give you space to make these payments more easily.

Cons of Consolidating

Repayments Could be Higher

Of course, there are also some drawbacks to consolidating your loans. First, it's important to remember that consolidation doesn't necessarily mean that you'll get a lower monthly payment -- it just means that you'll have one payment instead of several. Consolidating a loan means you will have a longer period over which to repay it, which means you may pay more interest in the long run.

Credit Score Impacts

Suppose you decide to consolidate, and your credit score has any misconduct on repayment history due to balancing multiple loans you In addition. In that case, consolidating your debt may cause you to rack up additional fees for missed payments. You may not get a better interest rate, especially if you have a low credit score. You could be paying extra fees and more interest over the life of the loan. Lastly, if you have a spending problem, loan consolidation may worsen things. You may be more in debt if you need to be more disciplined with your money.

It’s important to remember that there are associated pros and cons, so you must consult your financial professional to see whether consolidating is right for your healthcare practice. Additionally, you may not need to consolidate if you are comfortable with your current lending arrangements and make repayments with no issue. If it isn’t broken, don’t fix it!

Consolidating has many benefits, particularly if your business feels the pressure of multiple payments and you want to reduce your debt more smoothly and easily.

Why Your Healthcare Practice Should Consider Consolidation

Over time, using multiple sources of credit to finance your healthcare practice can add up without even realising it. But you have options to reduce how you manage repayments, potentially minimise your repayments as well as the interest you would pay in comparison to managing multiple debts simultaneously.

Consolidation works well for businesses looking to combine their multiple streams of debt. But it’s not for everyone. If you are only looking to consolidate one loan, then you would benefit from refinancing and for those with other financial pressures consolidating may not be appropriate.

In person finance appointment discussing debt consolidation

Want to Learn More About Consolidation for your Healthcare Practice?

The best way to find out if consolidating your finances is the right option for your healthcare practice is to arrange a 30-minute, no-obligation review. One of our Finance & Insurance Partners brokers will be able to talk through the right solution for your healthcare practice.


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