August 1, 2018
This is Podcast #3 in the six-part ROB series “Manage Your Practice Like a Professional” with Michael Kling, OD.
Net cash flow is the most critical metric in practice management and practice valuation. Here are keys to maintaining a positive cash flow, so you can better serve patients and gain financial strength.
INCREASE VALUE. Practice buyers, such as private equity companies, look at net cash flow as the key determinant of practice valuation. PE computes both acquisition price, growth potential and resale price in multiples of net cash flow.
KNOW GOOD DEBT FROM BAD DEBT. In business, debt is good if it enables you to increase revenues long-term (e.g., acquiring a new diagnostic instrument). But taking on debt to cover operating expenses can have a disastrous effect on net cash flow.
IMPROVE CASH FLOW. Increasing fees by as little as 1 percent, or decreasing cost of goods by just 1 percent, can boost net cash flow dramatically. Also, by setting vendor and creditor payments to cash-rich times of the month, you can avoid costly over-borrowing to meet expenses.
OTHER PODCASTS IN “MANAGE YOUR PRACTICE LIKE A PROFESSIONAL”