3 Ways to Improve Your Practice’s Cash Flow
One of the biggest reasons businesses fail is lack of adequate cash flow, and veterinary clinics are no exception to this. If your practice has survived the brunt of the pandemic, cash flow may not be at the top of your list of priorities. It should, however, be on your radar. And, more importantly, you should be taking proactive steps to ensure that your net cash flow is maximized moving forward. Let’s take a look at three strategies below that you can implement today to help protect your business and promote greater success tomorrow.
The first thing many think of when it comes to increasing cash inflow is to decrease cash outflow. In theory, this is a logical solution. In reality, however, it’s much more complicated. Should you cut unnecessary spending? Of course! Routine audits should help you identify areas of waste and negotiating better rates with vendors may help bring some of those necessary expenses down.
Beyond this, however, it’s about being strategic with how you spend your money. Make sure that what you’re allocating your funds to will ultimately contribute to revenue increase and practice growth. In many cases, the old adage “you have to spend money to make money” is true. You just have to be wise about how and where you spend that investment.
Focus on Efficiency
Your practice may currently run like a well-oiled machine, but what would it take in order for you to bring in more business? Many practices reach a point of stagnation where they sort of plateau, maintaining a steady number of clients, but being unable to take on more without having to hire additional staff.
Fortunately, there are ways around this conundrum. In particular, technology is widely available to help alleviate a lot of the manual tasks that once required human input. Are there ways that you can leverage these tools to free up your existing staff? Are there policies or procedure changes that might improve the efficiency of how your current team works? Identifying these things and taking action can help you accomplish more with less, which will facilitate growth and ultimately increase cash flow.
Buckle Down on Receivables
The veterinary industry is somewhat unique from other professional services in that there are many emotional factors involved. This can make it difficult to implement and enforce payment policies. For instance, asking someone to provide payment immediately after they’ve just had their beloved dog euthanized can be quite a sensitive matter. But, requiring payment at the time of service is imperative if you are to achieve long-term, sustainable success.
If you want to be a little more lenient with those clients who may not have the available funds, consider offering pet insurance and other third party payment options. Resist the urge to extend credit or offer payment plans directly. It’s never a good idea. In fact, from a cash flow standpoint, it’s a terrible one. But, if you choose not to heed this advice, be sure to stay on top of any outstanding balances owed.