Just like other organizations, medical practices seek awareness of short-term gaps to avoid cash flow shortages and need a way to communicate operations to colleagues and staff.
Established a multi-practitioner medical office experiences volatility in payables, receivables, and expenses due to the timing of insurance payments, patient refunds, and large biweekly payroll expenses, as well as additional operating costs.
Accounting Software Platforms
Sage Intacct, Xero, Quickbooks Online
Cash Flow Barriers
- Doctor bonuses (irregular outflow)
- Patient refunds (irregular outflow)
- Large biweekly payroll expenses (regular outflow)
- Insurance payments (irregular inflow)
Additional Financial Factors, Goals, and Patterns
- High revenue organization
- Reliance on line of credit for short term bridge to cover expenses
- Desire to grow practice revenues
- Desire to grow savings
Regular inputs invoices and bills into the accounting platform via in-house medical billing and in-house AP/AR department.
3rd party time tracking application integrated with accounting software.
Regularly updating the books within the accounting platform should be adequate to predict and manage the cash flow of the office, but it’s not - especially with an array of medical practice choices that are available to patients today. The practice wants awareness of short-term gaps to avoid cash flow shortages and wants a platform to communicate high-level financial and operations plans to colleagues and staff.
Reality before Dryrun
From time to time, payment timing becomes misaligned and the bank account is overdrawn.
There is no short term visibility of upcoming payables and receivables. Lack of visibility results in stress and financial mistimings.
- Tough to forecast in the short term - the line of credit is the bridge till insurance pays
- Doctors are not confident in paying out bonuses
- Patient refunds are difficult to predict
- “When do I have an operational budget for new equipment, consumables, specialty machines?”
- Oversights are expensive and costs accrue in the form of fees and penalties
- Embarrassment and stress related to payroll and overdraft
With time savings and longer runway, practices and their advisors can:
- Plan for mistimings
- Plan for operations
- Avoid fees
- Avoid financial stress/stress of the unknown
- Grow the practice
Want to learn more about managing cash flow for a medical practice with Dryrun? Download the complete white paper here.