I don’t like is the expression “cash flow”
For the simple reason, cash does not flow.
Cash has to be managed.
Cash Flow
Around this time of year, I take calls from consultant surgeons who want an increase in cash collections.
It’s happened every year since MHM was formed. The normal instruction is to increase the cash flow. Immediately. Simple enough. I can do that.
Existing clients don’t call because invoices have already been generated for them and they’ve already been paid for their work. Their cash has already been maximized.
Purge
The real problem faced by potential clients though was highlighted this morning when a consultant surgeon referred to needing an outstanding cash flow “purge” within his practice.
This highlights to me a more fundamental underlying issue. Let me explain.
A consultant surgeon – just the same as any business – should know how much he is invoicing both in terms of patient numbers and the value of those patients.
If he is invoicing correctly and ensuring he gets paid he can also, therefore, calculate his revenue receipts.
Should he another service or product, he should be able to perform the same calculation.
So he knows how much he is or should be invoicing. Providing he proactively manages his practice.
Managing
If you think about it, most consultant surgeons already know their overheads too. They know how much their room rental is. They know how much the staff cost.
And they know how much their professional indemnity costs (too much before you ask).
Of course, there are other expenses but fundamentally they already know their expenditure.
They know their total costs.
Therefore they know how much they are spending too.
Charles Dickens knew all about cash flow
Enter stage left Mr. Micawber:
He knew a thing or two about how to run a private medical practice did Charles Dickens.
For one thing, he knew cash doesn’t just flow into it.
It has to be managed.
Just don’t say cash flow to me.
pete@medicalhealthcaremanagement.co.uk