Cash Flow Secrets – 7 Tips To Help Improve Your Cash Flow
StreamCare Contact Person:
Lloyd 904-412-6135
Summary:
Lisa Faast discussed the importance of cash flow management, especially with upcoming DIR fee changes in 2024. She emphasized the need to understand cash flow, which differs from profit, and shared seven tips to improve it: decrease inventory, extend payment terms, restructure debt, reduce expenses, collect more payments, increase profits, and leverage other people’s money. Specific strategies included using data rhythm for inventory optimization, negotiating longer payment terms, and considering the Plum MX card for extended payment periods. Faast also highlighted the importance of maintaining at least 15 days of cash on hand and offered resources for further support.
Action Items
- Post any follow-up questions about cash flow strategies in the community chat for later answers.
- Visit Diversify RX booth at NCPA conference to say hello if attending.
- Contact Lloyd at Streamcare for workers comp billing setup using provided phone number 944-126-135.
Outline
Cash Flow Secrets Presentation Overview
- Lisa Faast introduces the monthly mastermind focused on cash flow secrets presented at the summit last week.
- Emphasizes the importance of understanding cash flow, especially with upcoming changes to DIR fees in 2024.
- Mentions attending the NCPA multiple locations conference in Clearwater, Florida, and the diverse content from various speakers.
- Encourages participants to ask questions and highlights the complexity of cash flow in pharmacy.
Understanding Cash Flow
- Lisa Faast explains cash flow as the ebb and flow of money in and out of a pharmacy, comparing it to the tides.
- Distinguishes cash flow from profit, noting that profit is not always immediately visible due to payment timelines.
- Discusses the importance of understanding cash flow to avoid financial surprises and manage payables effectively.
- Highlights the impact of different payment terms and grace periods on cash flow.
Seven Tips to Improve Cash Flow
- Lisa Faast outlines seven tips to improve cash flow, emphasizing that each tip may not apply to every pharmacy.
- First tip: Decrease inventory by reducing purchases, returning overstock, and cashing in debt inventory.
- Second tip: Extend payment terms by renegotiating due dates and maximizing grace periods.
- Third tip: Restructure debt by refinancing loans and negotiating lower monthly payments.
Reducing Expenses and Increasing Profits
- Lisa Faast discusses the importance of reducing expenses to increase net profit, focusing on payroll as the largest expense.
- Suggests negotiating lower prices for supplies and evaluating the necessity, profitability, and reducibility of expenses.
- Encourages pharmacy owners to involve employees in finding ways to save money.
- Recommends selling higher margin OTC items, increasing cash-based clinical services, and dispensing higher margin prescription items.
Collecting More Payments and Leveraging Other People’s Money
- Lisa Faast advises reconciling third-party claims to ensure all payments are collected and considering having customers pay credit card fees.
- Suggests being more aggressive with in-house charge accounts and increasing profits through higher margin items and clinical services.
- Recommends leveraging other people’s money by getting a line of credit, using credit cards wisely, and considering the Plum MX card for extended payment terms.
- Emphasizes the importance of having a financial strategy to manage cash flow effectively.
Key Performance Indicators (KPIs) for Cash Flow
- Lisa Faast introduces KPIs for cash flow, such as days of cash on hand, and explains their importance in managing financial health.
- Recommends maintaining a minimum of 15 days of cash on hand in normal times and 20 days during the DIR fee apocalypse.
- Encourages pharmacy owners to work with bookkeepers or accountants to calculate and monitor these KPIs.
- Highlights the need for a strong financial strategy to survive the upcoming cash flow challenges.
Membership Details and Final Q&A
- Lisa Faast explains the two levels of membership: regular and unlimited coaching, with the latter offering additional benefits.
- Provides pricing details for the membership levels: regular membership at $297 and unlimited coaching at $797.
- Answers questions about the availability of Streamcare contacts and the use of coupons for clemastine.
- Encourages participants to reach out with any further questions and to utilize the community chat for ongoing support.