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CASH FLOW CHALLENGES
Horror stories from pharmacy owners are too frequent. These stories vary from “I always had money in the bank until now” or “I just found out a plan hasn’t paid me for 6 months and now I am broke” or “I had no idea my DIR fees would be so high and I can’t afford them”. Many pharmacy owners don’t know where to turn to help combat the reality we are all in with today’s industry. As the squeeze on pharmacy owners gets tighter you need a game plan to be able to release the pressure.
Now more than ever, pharmacy owners need a strategic financial partner that has their back. This is why PDS has redefined how we approach pharmacy financials. PDSfinancials brings 21 years of experience helping pharmacy owners with the expertise of CPAs, CFOs, and accountants to give pharmacy owners the insights they need to deliver results. You get pharmacy-specific financial services including accounting, reporting and benchmarking, tax preparation, and more at an affordable price.
PDS helps you make better business decisions with stronger insight into your pharmacy’s financial performance.
Decrease Inventory
Inventory is a pharmacy’s largest expense. Manage it tightly and increase inventory turns to a minimum of 16.
Renegotiate Payment Terms
Ask for a later payment date or even a shortterm payment deferment can ease the squeeze until other measures have time to kick in. This is especially important for your wholesaler and just a few days later payment can make a monumental difference.
Restructure Debt
Consolidating and refinancing your debt can lower your monthly obligations to improve your cash flow. Consider using pharmacy specific companies such as HealthGrowth Capital or Live Oak Bank.
Focus on OTCs
Most pharmacies have Non-Rx sales of just a few percentage points of their total revenue even though OTC, health, beauty, and wellness products tend to have margins of 50% or higher. OTC solutions improve patient outcomes and improve your profitability (with no PBMs!).
Look at Staffing
This is your second largest expense. Your goal should be less than 13.6% of revenue is spent on payroll. Even by making small adjustments such as ½ hour a day for an employee or two can add up to a big savings come payroll time.
Turn Your Inventory into Cash
Remember that big black hole of cash that we like to call your inventory? Turn your expired inventory into cash with a reputable and aggressive reverse distributor.
Increase Profits
While profits do not equal cash automatically, improving profits while keeping your expenses the same will. Cut out the greedy PBMs for your workers compensation prescriptions and use a direct billing service.
Utilize High ROI Programs
Sometimes it does take money to make money. Invest a small amount into a program that will result in a big reward. Joining a health and wellness program, such as weight loss coaching can get you earning new revenue that is well worth the investment.
Maximize Clinical Based Revenue
Get paid for your services and not just for selling a product. Diagnostic testing is a great way to broaden your services and meet the needs of your patients. Now more than ever, your patients see you as the healthcare provider you are.
Reduce Expenses
A dollar saved is a dollar earned. Look at every expense and see what can be cut or reduced. This is especially important for
operational costs that you cannot eliminate.
Leverage Credit Cards
If you properly leverage a credit card you can improve your cash flow in the short term. If you pay your bills on their due date with your credit card, this will generally give you another 30 days to pay your credit card before you incur any interest charges. Be sure to pay off your credit card each month to maximize this benefit without racking up large credit card balances and high interest fees.
Avoid Unnecessary Fees
Having unnecessary bank fees such as overdraft charges can add up extremely fast. If you are experiencing exorbitant bank fees, talk to your bank first and then be sure to tie your payments to a credit card rather than your bank account. This way you can manage your cash more effectively without racking up a ton of charges.
Mark Due Dates
Pay your bills as late as you can while still being on time. Don’t pay in advance if you are having cash flow issues.
Collect More Payments
While not much can be done for PBM AR, for money that is owed by patients, leverage a professional billing and collecting service to improve efficiency.
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CASH FLOW
CHALLENGES