Question

why is a continuous flow of income preferable to a once-a-month influx for a provider's office?

Answer 1

Continuous flow of income helps in better management of working capital. Since cash inflows are distributed for the entire month so cash outflow can be managed in an efficient way. Day to Day expenses can be managed through these funds. There will not be the need to borrow fund for day to day from banks and thus interest cost can be saved. Further default risk is reduced by continuous flow of income and if bad debt happens the amount of default will be less as compare to monthly model.

Due to saving of interest cost and incremental benefit of collection, continuous flow of income is preferred over monthly for a provider's office.