When setting cash flow and medical billing strategies for your practice based on monthly receipts, it’s critical to review the number of days you have in a given month and where you have the opportunity to earn cash. Some months simply have more days of earning potential than others.
A good way to explain this is to look at the first months of 2017, February and March. In February, your practice had the opportunity to make money on 20 days. In March, your practice has the opportunity to make money on 23 business days. If your practice is averaging $100,000 in receipts each day there will be a potential swing of around $300,000 from February receipts to March. You also have to take into consideration any holidays. In addition, you need to factor in payor cycles. For example many government payers remit on specific days of the month. If you miss the charge submission deadline or the check day falls in the next month this can create a large variance in receipts from one month to the next. This can make monthly budgeting potentially challenging.
To base goals and cash flow on a flat amount each month is not sound planning. In order to maintain a better handle on your practice’s month-to-month cash flow, we suggest instead setting goals based on per day and historic seasonal averages, then the number of days in a month. Incorporate provider vacation time and clinic downtime. Combining these factors will give a clearer picture of what you can expect for cash flow. This process will allow you set and achieve more accurate results and set realistic monthly goals and expectations.
Outsource Receivables Inc. (ORI) provides monthly projections and helps independent medical practices everyday throughout the Midwest with strategies and services to effectively run their business office and manage their budget expectations for accounts receivables.