Technology for Independent Optometry Cash Flow Management
We know that cash flow is the heartbeat of a successful Independent Optometry practice. Positive cash flow leads to achieving your ultimate goals: optimal patient care, satisfaction, retention and even practice growth or expansion. Negative net cash flow leads to tough decisions including undesirable steps such as reducing staff, low inventory, and cutbacks on marketing, all of which puts patient care and satisfaction at risk. If net cash flow is the lifeblood of the practice, then long-term negative cash flow is a slow bleed that puts the practice itself at risk for closing. While cash flow calculations are straightforward (total cash in minus total cash out), it is the ongoing management of this that presents a struggle for many Independent Optometry practice owners who are busy balancing patient care with day-to-day operational needs.
It is not enough to simply “track” cash flow, it is ESSENTIAL to be strategic.
Independent Optometry practices frequently have a considerable amount of debt to manage, which means that any significant fluctuations in monthly revenues could pose a real risk if outgoing payments are not managed strategically.
In this article, we’ll offer three options in technology to help Independent Optometry practices manage their cash flow strategically, efficiently, and effectively.
Identify a Resource to Manage Your Cash Flow
The top reasons Optometrists and Opticians choose to go into business for themselves are easy to understand. You can be your own boss, make your own decisions, control your work life balance, and provide patient care according to your best judgment. To make that dream a reality, the business must generate positive cash flow and operate with a baseline of liquidity. According to Mick Kling, OD during a SECO presentation, bankers are recommending that an Independent Optometry practice have between 7%-10% of a single year total revenue in “cash reserves” as an emergency fund. The ONLY way to achieve that and other financial goals are through the dedicated help and focus of a trained professional OR technology that simplifies the management of all these incoming and outgoing funds to allow YOU, the practice owner, to maintain a position of strategy over cash management.
Before we list off three cash flow management apps, it is important to define the activity of cash flow management versus other general accounting and bookkeeping functions. While cash flow management is often managed by the practices accounting software, outsourced financial professional or staff member, it is its own discreet activity that requires weekly monitoring and reporting. This activity manages and tracks the flow of all incoming cash and outgoing cash in a specific time period. It can also forecast future cash flow based on historical data and known upcoming necessary expenses. Most modern bookkeeping software such as FreshBooks, Quickbooks, Xero or others produce financial statements, profit and loss reports, and/or even payroll processing and invoicing. Some “may” have capabilities to manage the specific activity of cash flow OR they allow integrations to apps that can perform the specific cash flow management function.
A first step is to review your current resource or technology capability relative to cash flow. If it is a staff member managing the software, you’ll want to consider their knowledge and experience in this area.
Techify Your Cash Flow Management
Some options for current cash flow management tools on the market today include:
PlanGuru’s business budget software is known for its scalability. From creating a simple small business budget to a highly detailed operating budget, PlanGuru can make those accommodations. PlanGuru offers both a cloud-based app and a desktop application. It integrates with Excel, Quickbooks and Xero. It provides balance sheets, income statements and cash flow statements along with additional analytics tools.
Float deserves recognition as an award-winning business budgeting and cash flow forecasting tool. It is an add-on for practices that use Xero, QuickBooks Online, or FreeAgent. Float provides clear visibility into cash flow in real-time, as well as providing the ability to set budgets – an important tool for practices looking to strategically reduce debt OR plan for growth. Float allows a practice to view cash flow on a daily, weekly or monthly basis and can alert the practice when cash flow is experiencing a peak or a decline. Float creates actionable insights for businesses – another helpful tool for practices who could use some support in recommending tactical strategies to mitigate negative cash flow situations or make optimal use of excessively positive cash flow situations.
Fluidly is a cash management software specifically designed to help small businesses keep on top of cash flow. It provides real time cash flow analysis and cash flow forecasting to help keep you on top of your cash position and forecasted future cash position. Fluidly also helps your business plan for various cash flow scenarios. It is web based and integrates with both QuickBooks or Xero and works for both Mac and Windows. With pricing starting at a little over $13 per month, this is another affordable option.
The Bottom Line
We are fortunate to live in an age of technology. Independent Optometry is forced to limit its expenses as much as possible. However, there are affordable and turn-key tools on the market to help manage and strategize this essential part of your business. Our recommendation is to evaluate your current resource and their capabilities, seek out some free trials, and make cash flow management a consistent task in your overall practice management.
If you would like more information on surefire ways to improve your cash flow, please set up an appointment with a CECOP USA representative today.