As a pharmacy owner, you know that cash flow can be a huge issue. In fact, it is the number one problem causing anxiety for pharmacy owners that I speak with. It seems like every other day there is another expense to pay, and it can be hard to keep track of it all. Let’s dive into some tips to help you quickly fix your cash flow problems!
Always be prepared for unexpected expenses.
As an independent pharmacy owner, you must be prepared for unexpected expenses. Just recently I was caught off guard by the renewal of our bond and insurance policies. When you are busy taking care of your patients and managing a multi-million dollar business, time does fly by!
The best way to be prepared for the unexpected is to:
- Have a cash cushion in the bank (yeah, I know this one is tough).
- Have access to a line of credit at a bank (apply for one when you don’t really need it). We recommend Capital Solutions Bancorp for working capital. Email Carlos at firstname.lastname@example.org.
- Have a business credit card with good perks.
Keep track of your expenses.
One of the best ways to improve a cash flow problem is to simply keep track of your expenses. Tracking is especially important for those annual or semi-annual bills. I like to have a calendar where I input these expenses with a notification for 30 days and 2 weeks before, this way I can be prepared. I did not follow my own advice recently and I paid for it with scrambling at the last minute. By tracking past and future bills, you will be able to see the upcoming demand of your cash and can better plan for expenses.
Review your revenue and expenses regularly.
Going in line with keeping track of your expenses, you must conduct consistent reviews of your expenses. Ask yourself these questions:
- Do I still need this expense?
- Can I get it cheaper?
- Is there a better option?
Recently, one of our Pharmacy Badass Members Frank Tant shared his progress on analyzing his expenses and the savings he has found.
Frank Tant: In response to Dr. Lisa Faast’s article: 14 Strategies to Improve Pharmacy Cashflow, I put together what we have done over the last year.
Here are some quick tips for fixing cash flow problems:
Take advantage of discounts and promotions.
Many businesses offer discounts and promotions, so take advantage of them! Many buying groups run monthly specials that can be advantageous. Ask every company you buy from if they have any current specials or if there is any way to earn a discount. You can often earn free goods by referring new customers to them.
Negotiate with your creditors.
If you are having current cash flow problems, then one of the easiest ways to ease the pain is to negotiate payment terms. Ask to push back your due date by a week, this is especially helpful for your primary wholesaler. Even a few days can be a huge difference in your cash flow. Instead of paying at the time of placing an order with main of your suppliers, ask them to invoice you. This can often buy you weeks before a payment is due.
Reducing your inventory will create instant cash in your bank account.
Your inventory is a form of a cash bank account. Each bottle on your shelf represents a stack of dollar bills. You can freely turn those bottles back into cash by not replacing them when dispensed or by returning overstock to the wholesaler. Most pharmacies have between $20,000 to $50,000 of excess inventory. For Pharmacy Badass University members we have a step-by-step course for reducing your inventory and calculating what it should be. For outdated items, we recommend using Flash Returns to get the maximum amount for your dead inventory.
Cash-based revenue can help bring in additional cash quickly to your pharmacy. I like to break cash-based revenue down into 3 categories:
Rx Cash-Based Revenue
Are you putting a focus on letting your community know you are a solution to high-cost prescriptions for cash patients? A great way to do this is to start posting on Facebook and LinkedIn that you are a better option than an online or mail-based pharmacy. Not only will you help patients save money, and you can also provide a full-service pharmacy experience. Common cash prescriptions are for sexual health, cosmetic, weight loss, or chronic conditions. Start educating your community and you can sell more cash-based prescriptions which will help boost your cash flow.
OTC Cash-Based Revenue
Supplements, Supplements, Supplements. This is an area that 99% of pharmacy owners need to get better at. Your community is buying supplements in huge amounts. They are getting them from Amazon, GNC, online stores, their neighbor, just about everywhere besides you. Why? You aren’t selling to them. Here’s what I mean. Those other places are actively educating and inviting people to buy supplements from them. You have a captive audience in your prescription patients. You also have the expertise as a pharmacist and your patients know, like, and trust you already. Create a goal for everyone on your staff to recommend one supplement to every patient. Many will say no, but you will be amazing at how many will say yes. Especially, once your staff becomes more comfortable making recommendations. If you need ideas on where to start, check out our drug-induced nutrient depletion or these other articles on supplements.
This area is going to be the most foreign to the majority of pharmacy owners. Most pharmacists are not currently charging for services. Professional services you can charge for have a broad range and really can be anything your community thinks will solve their problems. Here are a few examples.
- Weight loss classes
- Prescription regimen consults
- Foot detox baths
- Hormone consults
- Point of care testing
- Supplement consults
- pH testing
- Smoking cessation
These are just a few tips to help you quickly fix your cash flow problems in your pharmacy. If you have any other questions, please don’t hesitate to reach out to us at email@example.com! For more information on Pharmacy Badass University, click HERE.