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As people always say, “Cash is the lifeline of any business.” This statement holds especially true for the companies in the home health industry because without sufficient cash flow, patient care would come to a standstill. There are many ways to improve your agency’s cash flow from creating and submitting claims as often as possible to getting a line of credit from a bank. However, I would recommend trying a few other options before resorting to going to a bank or a factoring agency for money. In this article I will explore the primary reasons for cash flow issues and how to overcome these challenges to ensure a consistent flow of cash.
One of the primary reasons for delayed cash flow for HHAs is that they still adhere to the ancient method of billing in arrears. Though this method allows agencies to keep a better track of their expenses and invoices, it fails to provide sufficient cash flow. In order to overcome this issue, you can bill your clients ahead of time allowing you to cover your ongoing expenses such as payroll. However, remember that you will need to adjust your billing practices to account for any additions or deletions once the job is done. After each billing cycle, check which services were performed versus what you billed and make and credits or debits accordingly.
Taking deposits is a convention followed by many people in service-based professions. In order to alleviate your cash flow, you can make it mandatory for your clients to pay a deposit before you start their services. Traditionally, the deposit would be the cost for all the services rendered during the first 1 to 2 weeks of care. The deposit will give you a cushion against the expenses that you will have to incur because you will not get reimbursed from your insurance any time soon.
Remember to always be proactive when your collecting payments from customers and insurance agencies. Setup your organization so that you can accept credit card payments or even issue warnings to customers to remind them that if they told pay their bills within two-week arrears it could cause an interruption of their service. Worse case scenario, seek professional help from home care experts who have dealt with these issues before and know how to resolve them.
Using Technology to Improve Cash Flow
While there are things you can do to improve cash flow at an accounting level, the secret to having consistently positive cash flow is to adopt the right healthcare software system. The healthcare software system you choose should ensure that you perform timely documentation and QA which moves your patients forward through your agency’s workflow so that you can stay on top of billing and achieve financial success. Furthermore, the system should stress the importance of accountability and timely completion of patient documentation. For all that and more, KanTime Healthcare Software is the ideal solution for your agency.