Continually evaluate financial strategies
Q. At times, my company struggles from lack of cash flow. How will this affect my business in the long-term?
A. Very significantly. Working capital is the readily available funds needed to run your business. It’s the money you use to meet your payroll and overhead and manage inventory. You can use it to invest for growth and expansion. Having adequate working capital is the difference between long-term success and short-term stress. The lack of it leads to cash-flow problems, lost sales or missed expansion opportunities.
HME providers can use working capital to cut costs. Your vendors, suppliers, and distributors generally offer discounts for increased quantity purchases and/or cash payments. You can directly hit your bottom line by taking advantage of these reductions. Or you can use the savings to upgrade your internal systems or streamline your operations, improving efficiency and increasing profitability.
Another benefit is ensuring you have adequate inventory on hand to take advantage of sales opportunities. Suppose you just delivered your last unit and don’t have the funds on hand to replenish your inventory. How much business might you lose because you could not deliver? Or how much added business could you generate by using your discounts to be more competitive in your pricing?
For HME providers, having adequate working capital is alsocritical because of third-party payer reimbursement delays.
Today, healthcare providers must continually evaluate their current financial strategies to ensure long-term success. Medical accounts receivable funding should be a key tool in that process.
Fred Leder is vice president of business development for Sun Capital Group. Reach him at 800-880-1709 or email@example.com.