When I talk with therapists about the daily operations of their practices, we often find that there are small adjustments they can make immediately to improve their work processes. One of the areas I always address first is cashflow.
Here are 3 quick tips to improve cashflow in your private practice.
Make your bank deposits on at least a weekly basis to improve cashflow in your private practice. I’m often surprised when I talk with therapists and they tell me how long they put off trips to the bank. Sometimes they go every other week or every three weeks. I realize going to the bank is a bit of a hassle, but it’s well worth the time and the headache to keep your cashflow smooth. Why is it so important?
Checks are more likely to get misplaced when they don’t get deposited promptly. Have you ever had the experience of trying to “close the books” only to realize you can’t find the check that “Jane Smith” wrote? Therapists tell me about finding checks in patient charts or drawers or having checks appear in other mysterious places– everywhere but their bank accounts.
Settling your books gets a lot hairier when you put it off and have a greater volume of checks/cash/credit cards to reconcile.
The odds of having a bounced check increase when you delay your deposit.
You should be paying yourself from your business bank account as regularly as possible (after covering expenses and allowing for future expenses). With the help of a qualified financial advisor, you can find ways of making your money work for you (through an interest-bearing account or similar financial instrument). When your deposit items are lying in a drawer or cash box in your office they are doing nothing for you!
Some banks are now offering a service which allows you to “digitally” deposit your checks over the internet through Remote Deposit Capture. Check with your bank to see if this service is available to you.
2. CREDIT CARD TRANSACTIONS NEED ATTENTION
You can improve cashflow in your private practice by billing patients who maintain a credit card “on file” for sessions as they occur, rather than waiting to bill them on a monthly basis.
Although it may be tempting to run credit card payments in batches, it is much better to discipline yourself to process credit card payments as session fees occur.
Even though your practice may be small, you may get busy and a patient or two may slip through the cracks when it comes to processing monthly credit card transactions.
You are more likely to catch a “maxed-out” credit card when the patient owes 1 session fee versus 4 session fees. This can help avoid a potential collections problem before it gets started.
You can still provide the patient with a monthly statement if that is what they desire.
3. PROCESS PAYMENTS AND REMITTANCES PROMPTLY
To improve cashflow in your private practice, enter payments from insurance companies into your billing system as they come in, even if you’re not planning to deposit the check immediately, and review all the remittance advice paperwork.
It is always better to get a handle on the checks and remittances from insurance companies as soon as possible. With EFT (Electronic Funds Transfer) this is becoming an even quicker process. Regardless of how you receive the information and payment, verifying the information on insurance remittances immediately upon receipt and correcting any errors will greatly improve how quickly payment flows into your practice. Remittances that languish in your mailbox or in an electronic folder will cost your practice money.
As with payments from patients, checks and remittances from insurance companies can be misplaced if not processed promptly.
Claim denials, underpayments or other claim problems should be caught promptly and addressed immediately with the insurance company. By tackling the problem quickly, you will speed up eventual payment by the insurance company. It will also let you know if you need to take some sort of action (complete a treatment plan, request information from your patient, etc.) If you let an envelope sit unopened or a remittance sit in a virtual inbox, it can cost you time and money.
Taking and processing payments, as well as handling remittances in a timely fashion, will help you avoid costly collection and claims problems in the long run.
Even if your private practice is a “side” business for you, it’s important to get in the mindset that your money should be working for you (even when you’re doing your day job, if you have one). Moving money through your practice and into your hands in a timely manner will allow your money to grow for you, rather than allowing it to languish in your patient’s, or some insurance company’s checking account. Once it’s in your hands, you can choose to reinvest it in your practice or yourself.
Copyright © 2012 Real Psych Practice LLC
Heather Hill-Spaine offers more articles, tips and tools for starting, marketing, managing and growing your successful private practice on her website at