There's a saying in the business world, “cash is king”. That is not a suggestion, not a nice to have, not a cliché, it is one of many truisms in business. Cash rules. Without cash and a consistent cash flow your business will not be successful. The leading cause of business failure is running out of cash, and the leading cause of running out of cash is a lack of cash management processes.
What are the benefits and importance of cash management?
For clarity when I say “cash” I mean the physical element; that which you can put in your pocket, put in the bank, and pay your employees and expenses with. To further clarify, cash is not profits. It is very important that your business is profitable, but more important is turning that profit into cash. Cash is the physical manifestation of profits; because employees and vendors want to be paid in cash not some intangible thing called profit.
Why is it so difficult to have a successful cash management process?
Cash does not “just happen” any more than profits “just happen.” A business needs to develop market desired products and services, identify, and win customers, and maintain high customer service to move forward. To make a profit, a business must be intentional. Cash management requires a high level of operational intention. Payments will not just come to you. It requires several important and well-designed processes.
The cash management process begins with ensuring the timely, accurate, and complete invoicing of the customer. In a medical practice the definition of "invoicing the customer" takes on some nuance. The customer in a medical practice is a combination of the patient themselves as well as the insurance company. The payment is not 100% the patient’s responsibility, it also falls on other entities which can complicate the process. The “invoice” also has some nuances as well since the practice does not "invoice" the insurance company per se, as much as file claims. While the terminology is slightly different the concept of documentation generation to provide notification of costs (invoicing) of the various medical activities is the same across industries and business types.
While invoicing creates the record of revenue used for profit recognition, it is the collection process that is the keystone to successful cash management. As I just mentioned, invoicing must be timely, accurate and complete. Without these elements the collection of cash may be severely hampered, with such time-consuming activities as collections, denials, and resubmission to insurance companies.
The ImagineSoftware billing suite, is one of several powerful management tools to help to ensure effective cash management processes. The system can be run manually but with the utilization of ImagineBillingTM it can be highly automated and helps ensure the timely accurate and complete "invoicing" of medical procedures. Correctly utilizing and fully understanding the "Show Me the Money" function, gives powerful insight to the practice of where in the operational processes invoicing may have gone awry and where collections may be hung up; whether due to incomplete information, non-patient records, insurance denials, or coding mistakes, to name a few.
Get in touch with one of our Revenue Success Managers to learn how practices have grown by rethinking their cash management processes.