There a few things I hear that automatically set alarm bells ringing when I look at the invoicing and billing process of a business.
“I’ll take a look at it next week”
“I’ll get round to it in a bit”
“I’ve been meaning to look at that”
The final of those items was said to me recently at a virtual medical conference recently.
I was sitting on a panel facing an audience of medical professionals who wanted to ask what made a medical practice successful.
In amongst the various questions was one relating to how to monitor the medical billing of a medical practice.
To me the answer is simple. Before you can measure any part of a business, you must establish a standard to measure against. Which is what I said to the questioner. I asked if he knew how many invoices he had raised last month and the total value he had invoiced. Sadly he didn’t know either.
But, I continued, to improve the performance of your practice you must make sure you know how you are performing against whatever standard you decide is the most appropriate.
Now consider the issue of invoicing with a real MHM example. One of my guys – a private consultant surgeon – saw 25 patients between Monday, November 9th, and Friday, November 13th. Therefore I should be able to see 25 invoices.
That is a simple but effective control which makes sure everything is invoiced. The standard has been set because one invoice is required for each patient.
If I only have 23 invoices I have a problem!
But it also means at the end of November I can add up the number of invoices and also tell the client how many patients he has seen during November. Then we can compare that number with the number the previous year and see if it is higher or lower.
The introduction of such a basic management control isn’t a nicety. It is an absolute necessity if you are going to manage the invoicing process or indeed the whole business effectively.
The audience member agreed fully but then the alarm bells went off when he said “I’ve been meaning to look at that for a while now” He hadn’t because there always seemed to be some other problem to deal with.
That tells me his management controls aren’t as robust as they should be. It also tells me he is suffering from one of the worst and easily avoidable causes of business failures out there:
Leads to a backlog of invoices because it diverts you from identifying a backlog is building up.
Is even worse than having no cash because it distracts you from raising the invoices and thereby getting paid.
Procrastination is the cause of the problem he has because various insurance companies have declined his invoices for treatment as the consultation was more than 6 months ago.
Set time aside every single week to make sure, you perform a sanity check. Make sure you DO invoice. Make sure you review what is happening with YOUR money!