| What is the number one way to prevent
| |
| | staff shorten that time. This adjustment
|
| failure in business? Take a minute to
| |
| | will decrease the payment time by as much
|
| really think about your answer. What
| |
| | as 25 percent.Strategy #3: Collect Past
|
| comes to mind? Increasing patients or
| |
| | Due AccountsDo you have a significant
|
| customers served? ... Effective
| |
| | number of invoices out more than 60 days?
|
| marketing? ... Location, location,
| |
| | If so, is your staff doing anything to
|
| location? ... Improving patient or
| |
| | shorten this timeframe? Call the clients
|
| customer care? ... Being the best in your
| |
| | whose invoices have been out 30 days and
|
| industry?Although these are all essential
| |
| | inquire about the invoice. Devoting a few
|
| aspects of business, the answer isn't any
| |
| | hours a week to completing this task is
|
| of the above. The number one way to
| |
| | money well spent if it ensures that even
|
| prevent business failure is to properly
| |
| | half of your outstanding invoices are
|
| manage your working capital.To ensure
| |
| | paid a couple of weeks earlier.Some
|
| that we're all on the same page, working
| |
| | delays in the healthcare industry, for
|
| capital is simply defined as the
| |
| | example, are intentional. Prolonging the
|
| difference between your current assets
| |
| | turnaround for payment controls costs. In
|
| and current liabilities. If this figure
| |
| | these cases, you don't have any recourse.
|
| is positive, you have working capital
| |
| | As any doctor can tell you, calling the
|
| available. This working capital may exist
| |
| | insurance company to inquire about a
|
| as inventory, accounts receivable, or
| |
| | claim can be a fruitless task.Homework:
|
| cash on hand.Working capital management
| |
| | Review your collections procedures and
|
| is a critical management issue for
| |
| | tighten up your ship, if needed. Assign
|
| growing businesses or medical practices.
| |
| | one person to follow up on invoices
|
| Take the example of a growing doctor's
| |
| | outstanding for more than 30 days.
|
| office: As expenses rise with
| |
| | Realize, though, that collections results
|
| patient-load increases, you accrue more
| |
| | fluctuate with your clients' priorities.
|
| outstanding cash, particularly before
| |
| | Don't count on this as your only means of
|
| receiving reimbursement from the health
| |
| | improving your cash flow.Strategy #4:
|
| insurance payors. At this point, your
| |
| | Turn Existing Equipment Into CashAs we
|
| incoming cash does not nearly offset your
| |
| | know, keeping current with technology
|
| costs going out. This may be manageable
| |
| | improvements are constant and necessary
|
| while you work with payments for past
| |
| | to remain competitive. Leasing is a way
|
| services; however, eventually the time
| |
| | to stay up-to-date without incurring the
|
| lag may become a significant stress-point
| |
| | charges of frequently buying new
|
| for your business.By adopting a few
| |
| | equipment.But have you ever considered
|
| working capital management strategies,
| |
| | leasing equipment that you already own?
|
| you can make your assets work for you,
| |
| | One option is selling your equipment to a
|
| without becoming beholden to
| |
| | leasing company, and leasing it back from
|
| banks.Strategy #1: Get Paid NowLet's take
| |
| | them. This way, you generate some cash
|
| a look at the most obvious area: accounts
| |
| | for your business. You will, of course,
|
| receivable. What do your receivables do
| |
| | incur the lease payments.Homework: Take
|
| for you when they are not being paid?
| |
| | stock of what you own. If you need
|
| While your profit margins may look
| |
| | capital, contact a few leasing companies
|
| stellar if you have a lot of orders, you
| |
| | and gauge their interest in purchasing
|
| have essentially loaned all of your
| |
| | equipment for you to lease back.
|
| clients the amounts of your
| |
| | Alternatively, a Certified Cash Flow
|
| invoices-until they decide to pay you.
| |
| | Consultant will shop for you. Since they
|
| Doctors, in particular, know the pain of
| |
| | are independent consultants paid by the
|
| this situation. Insurance payors are
| |
| | leasing companies, you will avoid any
|
| particularly adept at prolonging the time
| |
| | additional charges.Strategy #5: When In
|
| for payment; they realize that the longer
| |
| | Doubt, OutsourceOutsourcing certain
|
| they take to pay, the greater their
| |
| | support areas of your business, in which
|
| profit margins.Is this just another cost
| |
| | you are not an expert, is an excellent
|
| of doing business? Well, not necessarily.
| |
| | way to reduce payroll and insurance
|
| Eighty percent of small business owners,
| |
| | costs. You will spend a higher dollar per
|
| medical practitioners, and small
| |
| | hour for importing experts, but the
|
| hospitals are completely unaware of a
| |
| | reduced costs (no health or workers'
|
| resource Fortune 500 companies have used
| |
| | compensation insurance) usually
|
| for decades: accounts receivable
| |
| | compensate for the cost variance.Be sure
|
| funding.Banks often measure accounts
| |
| | to hire these experts with as much
|
| receivable at as low as 50 percent of
| |
| | diligence as you would any in-house
|
| their overall value as collateral for a
| |
| | employee. As you'll typically retain this
|
| traditional loan. In accounts receivable
| |
| | type of assistance through specialty
|
| funding, however, accounts receivable are
| |
| | staffing houses, interview the
|
| calculated at full value. Plus, you
| |
| | individuals to be assigned. As integral
|
| accrue no debt for this financing, as you
| |
| | members of your team, they must be as
|
| essentially sell your accounts receivable
| |
| | reliable as any employee on your
|
| for payment against the full
| |
| | payroll.Homework: Contact area firms that
|
| value.Perhaps the idea of selling your
| |
| | provide the kind of staffing you need.
|
| revenue stream makes you nervous. But
| |
| | Compare the cost of those contracts
|
| consider this: You usually receive 80
| |
| | against the cost of keeping these staff
|
| percent of the entire amount of the
| |
| | on payroll. Be careful: Consultants can
|
| invoice within one or two days-at least
| |
| | get expensive, so be sure to build cost
|
| 28 to 118 days sooner than usual. This
| |
| | controls (i.e., fixed fee for a weekly
|
| cash injection allows you to make capital
| |
| | basis or hourly with a 'not to exceed'
|
| improvements for your business to
| |
| | clause) into your contract. Be clear on
|
| generate more revenue, leverage the cash
| |
| | their scope of work, to whom they report,
|
| for discounts on your inventory, cover
| |
| | and how you define satisfactory
|
| operating costs, or provide bonuses to
| |
| | performance. In addition, you must
|
| your employees, for instance.As your
| |
| | directly approve any staff
|
| invoices are paid, your funder will repay
| |
| | changes.Strategy #6: Inventory When You
|
| the other 20 percent, minus the
| |
| | Need ItInventory that sits in the
|
| negotiated fee (average four to five
| |
| | warehouse, not being sold for income,
|
| percent of the invoiced amount). Don't
| |
| | eats away at your available cash flow. It
|
| get hung up on the 'cost' of the funding.
| |
| | is an asset, sure, but it should not
|
| With proper management of those funds,
| |
| | become a liability because it is not
|
| you will more than make up for fees by
| |
| | quickly converted to cash. Over-ordering
|
| the investments made in your business.
| |
| | of inventory gets many businesses into
|
| Your day-to-day business costs may stay
| |
| | trouble.Review your inventory forecast
|
| the same, but the tremendous increase in
| |
| | all the time, and be aggressive. Know
|
| incoming cash will enable you to rest
| |
| | your options in times when you have
|
| easy.Homework: Review your accounts
| |
| | shortfalls. Fulfilling customer orders on
|
| receivable aging report. Note the average
| |
| | time is a number one priority, so don't
|
| payment time from one of your best
| |
| | take unnecessary risks. If you simply
|
| clients or insurance payors. Assuming
| |
| | hoard inventory to offset any chance of
|
| payment of 80 percent of the invoice
| |
| | being caught off-guard, you lose the
|
| value in 48 hours, make a list of ways to
| |
| | potential profits made by managing it
|
| use that money for your business:Cash
| |
| | more aggressively.Homework: Review your
|
| discounts on inventory (estimate in
| |
| | current and projected inventory for the
|
| dollar amounts).Buying or leasing new
| |
| | coming months. Do you need to make
|
| equipment (anticipated return in
| |
| | changes, or is it all under control? Make
|
| additional sales).New marketing campaign
| |
| | any necessary calls to your suppliers to
|
| (anticipated additional revenue).After
| |
| | negotiate better terms or better
|
| you total the increased income generated
| |
| | understand their supply controls.Make
|
| by implementing this strategy, you can
| |
| | Your Working Capital Work for YouWorking
|
| easily see the real benefit.Strategy #2:
| |
| | capital management is a key element to
|
| Shorten Your Operating CycleYour
| |
| | business success and the number one way
|
| operating cycle starts when you take cash
| |
| | to prevent business failure. By
|
| out of your account to begin work for a
| |
| | implementing strategies such as accounts
|
| client, and ends the day the client pays
| |
| | receivable funding, outsourcing, or
|
| you. If you complete a project on
| |
| | inventory management, your business can
|
| Tuesday, for instance, but do not invoice
| |
| | optimize the return on assets it already
|
| until the following Friday-or even the
| |
| | possesses. Your company will then be well
|
| end of the month-you lose days of income.
| |
| | positioned to handle future growth or
|
| Since you need the cash in your
| |
| | economic downturns.*Reprinted from Create
|
| account-not just in your profit
| |
| | the Business Breakthrough You
|
| margins-you must minimize the time
| |
| | Want:Secrets and Strategies from the
|
| between service rendered and service
| |
| | World*s Greatest Mentors© 2004 Mission
|
| invoiced.Homework: Review how long you
| |
| | Publishing, a division of The Mission
|
| usually take to invoice a client. If that
| |
| | MarketingMentors, Inc.
|
| period of time exceeds a week, have your
| |
| |
|
