In the United States, 99.7% of businesses are classified as “small” businesses, or companies with fewer than 500 employees. And as independent optometry practice owners, you fall into this category! As a result, you are also most certainly familiar with one of those most important facts of owning a small business which is that CASH is king, and in particular learning how to efficiently and accurately manage and improve cash flow is indispensable for the growth and success of your practice.
Understand Cash Flow
Cash flow is the amount of cash that comes in and goes out of your practice. The money you take in from eyeexams to lens cleaner is sales as revenues and the money your spend like paying the light bill is your expenses. The goal of cash flow management is to have incoming cash flow (your revenue) arrive in time to cover outgoing cash flow ( your expenses). However, as an optometry practice your cash flow is even more affected by insurance benefits, which can stagnate the process of getting paid on time. Therefore creating a budget to help you manage expenses is essential! One simple thing you can do to help you with budgeting and creating a cash flow forecast is using tools like EdgePro by GPN. This tool is free to all members who decide to opt in. With this tool you can can easily see how your business is performing in optical sales, clinical sales and insurance and forecast for the following month or year.
Optimize Cash Flow
Like mentioned above, insurance and other outside factors can put a hold on incoming cash to an optometry practice however, you can easily maximize cash flow in by ensuring that you are offering flexible payment options. When patients have multiple options of payment they can be more persuaded to buy multiple pairs or buy upgrades thus increasing your revenue. You can also optimize cash flow by maximizing your hours of operation. If you know that desirable exams hours are from lunch time 12-2 but you are closing for lunch, consider staggering lunch time so that you may be open those hours. Lastly, take a look at your inventory, if patients are not purchasing and you have well-trained staff, then it could be that your inventory is outdated or you are not competitively priced.
Plan For The Unexpected
If the pandemic taught us all anything, it was that we must learn that the unexpected can and will happen. Independent OD’s were forced to shut their doors and in the slow re-opening of the economy, many had to make investments to support a new type of patient experience. Fortunately, by now many practices are back to normal and others are thriving. It’s no secret that patient volume and sales alone can be deceiving. If your cash flow forecast didn’t account for new and different types of expenses and timing of expenses, even with customers coming through the door, your practice could be in trouble despite increased exams and product sales. So, in order to improve your cashflow you must account for the unexpected to help you offset any emergency spending in the future.
Paying Expenses on Time
Falling behind on paying bills is never desirable for anyone, and some OD’s will see no other resource than to take out one loan to pay another loan. But if you continue to not pay your bills on time eventually the problem will exponentially grow and keep rolling over month to month. This will in turn create a snow pile of outstanding fees and collections. However, you can easily plan a course of action to get back on track if you have created a cash flow forecast to manage your expenses. Referring back to your cash flow forecast will help you swiftly reveal what the problem is, allowing for timely action or course correction.
Utilize Your Resources
The one thing outstanding thing that all TSO members have at their disposal in comparison to other independent optometrist is the number of resources available as a member of the TSO Network. Unfortunately, many people think that using resources is asking for help but honestly, there’s nothing wrong with that. It is said that “The greatest mistake one can do is not asking for help” When you become a part of TSO you have access to resources that would otherwise be charged by consulting firms and others who negatively impact your cash flow. So be sure to take advantage of your Regional Manager by meeting with them on a monthly basis, and utilize the EdgePro software to forecast your cash flow and lastly be sure to use others at the Network office to help you connect with your community.
Elizabeth Moreno, who works as a Marketing Assistant, can help you plan community events or find other ways to reach out to the community and via charitable initiatives or other other ways that will help you connect with your patients and the people you serve, which will consequently help you increase cash flow.
These are just a few of the many ways you can improve cash flow, but it first starts with you taking the step to making it a priority. When you plan ahead and get in front of your cash flow management you get more time can be spent doing what you do best: providing excellent patient care.