“Never take your eyes off the cash flow because it’s the lifeblood of your business.” – Sir Richard Branson
You trained as a clinician, focused on providing high-quality, evidence-based care to improve your patients’ health and wellbeing. Now, though, you’re running a business. Patient care is why you’re there – but you can’t continue to be there unless you maintain a healthy cash flow. That’s absolutely imperative if you want to stay afloat.
Maintaining a healthy cash flow isn’t always easy when overheads seem to increase constantly. Add in unpredictable patient volumes and you can easily find yourself experiencing financial difficulties and the accompanying stress.
Here are 5 robust strategies to bolster your cash flow management as a healthcare business owner:
- Craft a comprehensive budget
The cornerstone of financial management for every business is a well-structured budget. It’s essential to track every dollar that comes in and goes out. Your budget should encapsulate all foreseeable expenses like rent, salaries, supplies, and marketing costs.
Then you need to account for contingencies. Earmarking funds for unexpected costs can save the day when unforeseen financial needs arise, like an injured staff member or a dip in bookings.
- Streamline billing and collections
A hiccup in the billing and collection process can strain your cash flow significantly. This is especially relevant to GPs who may require payments from third-party payers. Ensure that you send your invoices out promptly and regularly follow-up on any pending payments. Offering automated payment gateways can also facilitate quicker payments, enhancing the cash flow cycle.
- Harness the power of financial management software
In this digital age, leveraging financial management software can automate the tedious task of tracking income and expenses. Tools like Xero and MYOB all provide real-time insights into your financial health, enabling you to make informed decisions promptly. The cloud-based nature of such software also allows access from anywhere, anytime, ensuring you are always in control.
- Establish a cash reserve
The unpredictable nature of healthcare businesses necessitates a financial cushion. A cash reserve equating to at least 3-6 months of operating expenses can be a lifesaver during downturns or unexpected expenses. This reserve can provide the much-needed financial safety net during turbulent times.
- Dive into key financial metrics
Knowledge is power, especially when it comes to financial metrics. You need to know metrics like revenue per patient and where you’re potentially losing money due to your no-show rate or accounts receivable days. These metrics can guide you in identifying the strengths and weaknesses of your financial strategies, enabling a proactive approach to enhancing financial performance.
How can we help?
At Splice Marketing we have walked alongside many healthcare business owners who are in a tough financial position. And we’ve seen many of them turn things around by implementing these strategies, relieving their financial stress and recovering their love of being in business.
It’s all about creating a balance between impeccable patient care and solid financial management. With a structured approach to managing cash flow, you can keep both your patients and your practice in good health.
So, don’t close your eyes to your financial position. Instead, use these strategies to take control of your finances, and set your healthcare business on a path of sustained success and growth.
Like some help? Book a free 30-minute consultation with Splice Marketing.
