Improving Cash Flow Management
Like any business, professional practices depend on steady, and ideally growing, cash flows to survive and thrive. Taking steps to improve cash flow management can help to ensure operational stability in a practice while avoiding cash flow crises down the road.
Key steps to better cash flow management include:
Auditing current cash flows. You can begin this process by understanding your fixed and variable expenses and creating a cash flow forecast. As you do so, consider opportunities to reduce costs, possibly by negotiating with service providers, and to increase production. Many law firms, for example, can suffer from “billing leakage” that can be improved through automating lawyers’ work tracking and reporting processes.
Making it easier for clients to pay you. Set up a system that accepts different payment options, including online payments. Go digital by sending client bills by email and consider accepting credit card and other electronic payment options to expedite the payment cycle and make it easier to track incoming cash.
Invoicing on time and following up on unpaid invoices. Make sure that bills are sent out in a timely fashion with as little delay as possible. Medical practices, for example, should take steps to verify insurance status prior to offering service and to request payment at the time of service for the patient’s share of the bill. This latter step has become particularly important in recent years, as co-payments have risen significantly.
Upgrading your technology. There are several practice management software platforms that can help improve the efficiency and productivity of your cash flow management processes. Specialized tools are available for automating the accounts receivable and payments processes and maintaining accounting records. Many of these tools also track events and allow for detailed KPI reporting.
Professional practices provide essential services to clients and patients. But to operate successfully, they must also run efficiently as businesses. Washington Trust is here to help. Our Professionals’ Practice Banking solutions can help you improve your practice’s business processes.
Contact a Trusted Advisor
For more information or to speak with one of our trusted advisors about your unique financial needs, contact us at 800-465-2265 or submit an online form.