The patient appointment book is full and your business is the busiest it has been in years. You can go home at night after a busy day of seeing, measuring and fitting patients, confident that your business is as financially sound as ever, right?
Not according to Robert Benedetti, controller for Delatorre O&P and consultant for Promise Consulting, who explained that the feelings of comfort and stability often mislead small business owners into believing that a business is succeeding when it could be in serious financial disarray.
In part one of a three part series, O&P Business News presents tips O&P business owners can follow to keep their practices financially sound.
The dilemma of “wearing two hats,” according to Benedetti, is one that afflicts most small business owners that make up much of the O&P industry. As an owner/clinician, you need to focus equally on patient care and financial well-being to keep a successful business prosperous.
Pay special attention to specific financial matters before they get out of hand. Tracking your funds, specifically keeping a cautious eye on accounts receivable, is the first rule of keeping your business financially afloat.
What information should you look for and how do you collect it?
You should take a monthly snapshot of the following items: accounts receivable, cash flow, performance-to-budget (create one if you have not already) and monthly expenses. This information can provide you with the basic knowledge necessary to estimate the financial health of your business. Accurately capturing these figures may require a software upgrade or additional personnel training but it will be money and time well invested in the long run.
To get started, make sure your existing software systems are capable of reporting your desired information. If you do not already have a software system, research to find one that will suit your business, taking into account the size and needs of your company.
“Sometimes it is the operator of the system who is at fault, but other times it is the system itself,” Benedetti said.
Of all the information gathered, Benedetti encourages business owners to pay special attention to their accounts receivable report. This is, according to him, a company’s most important asset.
“We hardly ever find a company that is doing poorly that has good accounts receivable,” he said. As we consult with companies, the most prevalent issue…is poor accounts receivable – poor accounts receivable from the aspect that they are not collecting it.”
Outdated and outstanding accounts receivable (past 120 days) is essentially lost income that needs to be written off.
You need to ask yourself – why it is outstanding? Was it poor software, too little training? If so, you know how to resolve the problem. If not, it could be a number of things.
Maybe you need to be more aggressive about reconciling payment or payments are getting lost somewhere along the chain of command. Keep an eye on your monthly snapshots and reevaluate the policies and procedures of your office when requesting and processing payment. In time, you will find the discrepancy. Just remember, healthy management of accounts receivable is essential for your business.— by Jennifer Hoydicz
For more information:
- Part two of the series will be published in the October 15th issue of O&P Business News.