Sufficient cash flow is the lifeblood of your physiotherapy clinic. Without a steady inflow of cash, you won’t have the resources that you need to keep your business up and running.
Fortunately, we have some tips that can help you keep track of your cash flow and manage it so that you always have sufficient funds to meet your goals and continue to care for your patients.
1. Send insurance invoices promptly
Physiotherapy is a benefit that insurance providers often cover, so you can expect patients to utilize their insurance coverage to subsidize or fully cover their treatments.
To make things easier for patients, many clinics offer the service of directly billing the insurance provider instead of charging the patients and having them remit it to their insurance themselves. While this is an excellent service to provide your patients, insurance companies can take some time to pay your clinic, which could affect your cash flow and your ability to meet your clinic's financial obligations, such as payroll.
Fortunately, there is a way to speed up the payment process. By sending out invoices as promptly as possible, you can ensure that your payments are received in a much more timely manner. Also, you can choose a software program, like the Jane App, to bill directly to the insurance provider using the app itself.
2. Follow up on outstanding payments
Cash is king! This means that outstanding payments that are sitting in your receivables listing don't mean anything if you don't follow up on collecting them from insurance providers and your patients. Ensure that you have a process in place for following up on denied claims and outstanding payments regularly.
Send payment reminders to patients or collect their credit card information ahead of time to simplify the payment process. You can also track your days' sales outstanding to determine the average number of days that it takes your clinic to receive payment and work towards getting this number as low as possible.
3. Keep an eye on inventory
It may be tempting to overstock items such as ice packs, braces, and wraps to ensure that there is always a sufficient supply to meet your patient's needs.
Doing so, however, can tie up a great deal of cash in inventory which will negatively affect your cash flow. Work towards finding the proper inventory levels of all supplies and monitor these to ensure that you are never overstocked or understocked on any essential items.
4. Anticipate your future cash needs
Just like other businesses, there may be seasonality in your physiotherapy business. Busy seasons might coincide with certain outdoor sports or peak ski seasons, for example. Building a cash flow forecast to project future revenue and expenses can go a long way in helping you determine busy and slow periods and help you prepare for them.
Your clinic might generate greater profits during your busy seasons that can be set aside to cushion slower times. Also, suppose you anticipate making a large purchase at some point in the future, such as buying new equipment or opening up a new location. In that case, you want to be able to plan when you'll pay your other obligations to avoid facing cash flow issues.
5. Budget wisely
Proper budgeting is the key to success. Without a budget, your clinic is flying blind. Even if you are generating a profit, you can still quickly run into cash flow problems down the line if you don't properly manage your expenses.
Set a budget for your expenses and compare it with your actual costs to determine which areas you are overspending and why. This budget should be created one to two months before the new year, and you should closely track your expenses and revenues beforehand. This will allow you to make the most accurate budget possible.
Accurate and timely bookkeeping is the key to having good cash flow visibility. You won't know how much money you have sitting in your receivables, what expenses you have to pay, and how much to budget without good bookkeeping.
Fortunately, Enkel can assist you with all of these issues. We have a team of experienced professionals that can help you manage your bookkeeping so that you’ll have the cash flow visibility you need for financial success. For more information on how Enkel can help your physiotherapy clinic, contact us today!