As the end of the current financial year approaches, it's the ideal opportunity to take stock of your practice's working capital management, including your credit control.
So if you find that your year-end accounts show an unacceptably large total of unpaid bills, don't just write them off. Instead, use it as an incentive to tighten your systems and procedures and improve your cashflow.
Good cashflow management is essential throughout the financial calendar year and encompasses three core principles.
The first of these should present no difficulty for Healthcode users. As we explained in our previous blog, by using our time-saving e-billing system, you can create and submit invoices to PMIs which meet industry best-practice standards and are ready for payment. This system also provides tools for you to raise paper invoices for self-funded patients.
Obtain timely and accurate financial information
To stay on top of the money owed to your practice, you should be able to see the outstanding amount at a glance and have access to financial reports which provide more detailed information. For example, an aged debt analysis report is a basic tool for credit control because it clearly shows how much each payer owes, segmented into aged bands (31 - 60 days, 61 - 90 days outstanding etc).
But the more sophisticated presentation of your financial information, the better informed your credit control will be. Subscribers to Healthcode's ePractice manager can produce a range of financial reports which have been developed specifically for private medical practice including:
- Outstanding invoices by payer - make it easy to see who needs to be chased for payment by showing all invoices with a current outstanding balance by payer type, including or excluding shortfalls.
- Payment summer report - clearly shows the payments received within a selected date range so you can keep track of what invoices have been paid and the payment method used.
- Earliest service and payment transaction summary - this comprehensive report provides an instant summary of activities, invoices and payments. It is particularly useful for practices that want to monitor their invoices by the date of service as you can quickly see what consultations or treatments took place within a particular date range, the patient's name, a summary of the invoice, details of any payments which have been received and the balance still outstanding.
Within the Credit Control function of ePractice manager, you can filter the outstanding balances data to see all debts within a certain band or payer type and drill down into each item for further details about the relevant invoice(s) or patient(s).
All financial reports can be exported to a PDF or Excel file format. Exporting them to Excel enables you to remove any personal identifiable information so they can be forwarded to your accountant.
If you know exactly what you are owed, the next stage is to implement a watertight system for monitoring and chasing payments. The best option is to break down your credit control into a series of traceable tasks such as creating and following-up invoices, posting transactions such as BACS and credit card payments, allocating payments and producing reminders, statements or shortfall letters.
Healthcode's system enables you to assign and priorities tasks against each payer. You can then tackle them yourself or delegate responsibility to your practice manager.
The dashboard on ePractice manager, presents a chart showing outstanding payments. Users can drill into details at a click to view and update tasks so that it is easy to monitor progress.
Cashflow is King
It's a sobering fact that even profitable and well-respected practices can run into difficulties if they allow their cashflow position to deteriorate. In fact, poorly managed cashflow leaves companies unable to pay HMRC, their staff or their suppliers, making it the most common reason for business failure.
In the longer term, keeping tight control of cashflow will also help your practice finance itself through any unforeseen downturns or adverse changes in market conditions and ensure you are in a stronger bargaining position with lenders and suppliers.
To find out more about how Healthcode can help your practice improve its credit control, click here.