Five rules for managing your finances and five kinds of reports you may want to see on a monthly basis. Five rules. Bill properly, electronically and often. Second of all, fight back against improper denials, slow payments and other shenanigans which some of the insurance companies still play with us unfortunately to this day. Third, follow the money trail. Know where your cash is coming from, know how it gets there, know what happens to it. Fourth, watch the pennies. You don’t want to obsess about every dime you spend, but sometimes the small amounts can get away from you. You want your staff to have the resources they have. It’s very important. You don’t want to be nickel and diming them in every manner but, by the same token, sometimes some of these nickel-and-dime expenses which aren’t necessary can add up to money which could be better spent in other parts of the practice. And fifth, you want to invest in your practice. It includes equipment. It includes training for your staff and look at monthly reports.
Look at the revenue and expense report. Look at the revenue which has come in and look at where your expenses are going, by line items so you could have a pretty good understanding of where money is being spent.
You want to compare the actual money being spent to the budget which you set up in the course of the year. It is always a good idea to have a budget. Understanding that this is locked in stone, that you are going to be off your budget but that’s okay. It gives you a benchmark and it’s a plan. You can adjust the plan during the course of the year, or there is an understanding that you still need to watch the bottom line. Is there going to be income left after your revenue and minus your expenses?
The third kind of report you want to look at is your cash position and your cash flow. As I have said, there are 3 important things in business--cash, cash and cash. So you want to know how much cash you have available and how much cash you could obtain through loans or through leases. You want to see what your cash flow is. How much is coming in? How much you are billing for so you can anticipate what will be coming in and what kind of cash is going out the door. Surprisingly there are some very large companies which have run into actual problems in being able to pay their bills. Most importantly, you always need to be able to make payroll.
The next thing to look out as far as a monthly report is the number and distribution of your patient encounters. Look at the patients that you are seeing in your office, look at where you are seeing in the hospital, if you are going to the hospital. You want to look not only at the number of discreet patients you have but also by the CPT codes and the RVUs. The more RVUs, the more income. So look at that also and see how it is being changed over the course of a year and over several years.
And lastly, do a bank reconciliation. This is the time which your staff should be able to check to make sure that all checks can be accounted for and all cash can be accounted for. This could be done by people who are not involved in a day-to-day operation of the handling of cash. You want to have this checked to make sure that money isn’t disappearing that is unfortunately small businesses and medical practices are some of the places where people will steal, given the opportunity.