Defusing Your Practice Debt Bomb – Part 1
14 years ago
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Posted
9th July, 2010 00h00
In the past year the UK has seen unemployment rise and wages fall. What this means for your practice is that clients may not be in as strong a position to pay or they may not be in as much of a hurry to pay.
Also, don’t forget the psychological impact that the recession may be having on your front line staff who (even at the best of times) can struggle to feel justified in charging a ‘reasonable’ fee.
In this week’s blog, we look at steps you can take to reduce practice debt and keep your cash flow healthy. The old medical adage that ‘prevention is better than cure’, certainly applies here.
Give Clients Accurate Estimates
Implement and enforce an estimates policy. By giving out written estimates, you are forcing a client to face up to the financial reality of a procedure before they commit to it. This also gives you a significant advantage should things get ugly later.
Take A Deposit Upfront
This seems to upset vets when I recommend it. But think about it, what other business that has a large bill at the end doesn’t take a deposit? Hotels? Builders? Travel agents? Don’t forget all online payments are made upfront these days so people are used to paying in advance.
I guarantee you that the only people who will object (other than your team members initially – but they’ll get over it), are the ones who weren’t going to pay anyway. So you’ve lost nothing.
Time Management
Having your vets frantically typing up a bill, minutes before the client arrives for their appointment means at best they’ll make costly mistakes. At worst, if the bill isn’t ready, they might just let the client leave without paying. Discipline and team training are essential. Can someone else do the billing? Should your busiest vets be delegating work out to quieter colleagues to help with time pressures?
Make Payment A Cultural Norm
Adopt a practice wide culture of payment at the time of treatment. Don’t just have the terms and conditions stuck invisibly to the wall. Share the information that cash flow is king. Build it into your training programs. Also, I’d advise against having a salary structure that rewards turnover alone. It has to reward profit or penalise debt to change behaviour.
Monitor the Debt
Make sure you monitor the debt like your nurses monitor an anesthetic. OK perhaps checking every few minutes might be a bit paranoid, but at least check it monthly. Things can get out of shape quickly and the bigger your practice the quicker this can happen.
Dave’s Tuppence-worth
Cultural changes can take time to settle in but if you clearly explain the reasons for change and share a little information about why you need to address problems then there will be few who can reasonably argue back.
If this has been useful to you then good luck with making some changes. If you’ve got any other tips to add then pipe-up and drop me a comment.
Next week we’ll look at what to do if you already have a debt bomb ticking – before it blows up the business.
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