Why Your Practice Needs Steady Cash Flow

It’s virtually impossible for a veterinary practice to be successful without cash flow. Having a steady income means owners can maintain the day-to-day business, make smart investments, and plan for future growth.

Just because you’re waiting for patients to either pay their invoices or commit to a procedure for their pet doesn’t mean you can put off issuing paychecks or paying business expenses. As they say, the show must go on.

Ongoing Expenses

Whether you’re an aspiring or experienced practice owner, many ongoing expenses can impact your monthly cash flow. The biggest buckets include:

• Payroll: Administrative and staff income and insurance costs are recurring.
• Supplies: Bulk orders or replenishment can quickly add up to a sizeable amount.
• Occupancy: Your rent or mortgage has to be paid, and the lights and phones have to stay on, regardless of whether the money is flowing.

Anticipate the Unexpected

Of course, you can’t prepare for everything, but you should try to anticipate the unexpected in an attempt to manage the potential halt of income. For example, if a doctor on staff must take a leave of absence, that can impact the number of patients coming through the door and result in lost income.

Keeping up with technological and medical equipment improvements can put a strain your cash flow as well. While these investments can improve your practice’s efficiencies and capabilities, they initially can be costly and sometimes unexpected—or they can be a goal you strive toward, so that you can upgrade when the time makes sense.

Build a Nest Egg

It’s a good idea to have a nest egg for a rainy day—you never know if or when you will need it, but it will serve you well to have it. Cash isn’t something you should wait to get until it’s absolutely necessary. A bank could see a need as a risk. If you don’t have a line of credit that you can use at your discretion, consider a working capital loan to help fill the cash flow gaps.

Between treating animals, managing staff, and running your business, there is little time to handle financials, but it is unequivocally one of the most important aspects of practice ownership. By properly managing cash flow, you can maintain the long-term viability of your practice without interruptions that can impact you, your employees, and your clients.

Bob Castro is the president and cofounder of Bankers Healthcare Group, the leading provider of financial solutions for healthcare professionals. For more information, email Bob at bob@bhg-inc.com or visit www.bankershealthcaregroup.com.