I like blues music. I like Robert Johnson for example.
And I like cash (including Johnny)
What I don’t like is the expression “cash flow”
Because cash does not flow.
Cash has to be managed.
Around this time of year I start to take calls from consultant surgeons who in view of their impending tax payments require an increase in cash collections. It’s happened every year since MHM was formed. The normal instruction is to increase the cash flow. Immediately. Simple enough. I can do that.
Existing clients don’t call because invoices have already been generated for them and they’ve already been paid for their work. Their cash has already been maximised.
The real problem faced by potential clients though was highlighted this morning when a consultant surgeon referred to needing an outstanding cash flow “purge” within his practice. This highlights to me a more fundamental underlying issue. Let me explain.
He wasn’t viewing his private medical practice as a business yet that is just what it is:
A private consultant surgeon – just the same as any business – should know how much he is invoicing both in terms of patient numbers and the value of those patients. If he is invoicing correctly and ensuring he gets paid he can also therefore calculate his revenue receipts. If he wasn’t a consultant surgeon but sold another service or product, he should be able to perform the same calculation.
So he knows how much he is or should be invoicing. Providing he proactively manages his practice.
If you think about it, most consultant surgeons already know their overheads too. They know how much their room rental is. They know how much the staff cost. And they know how much their professional indemnity costs (too much before you ask). Of course there are other expenses but fundamentally they already know their expenditure. They know their total costs.
Therefore they know or should know how much they are spending too.
Enter stage left Mr. Micawber.
He knew a thing or two about how to run a private medical practice did Charles Dickens.
For one thing he knew cash doesn’t just flow in to it.
It has to be managed.