Even with all the available data you might have at your fingertips, you may occasionally find yourself feeling uneasy about your practice’s overall health. Diligence and early diagnosis make intervention possible. Look for these four financial symptoms that may indicate that your practice is heading for serious trouble:
- An abrupt change in accounts receivable trends. Prepare summary A/R reports to show a comparison of the past two or three months, as well as the past year. By comparing today’s figures with those of the past month or the past year can give you a sense of which direction you’re heading.
- Late-payment penalties. Study the invoices for bills before the checks are signed. Many—or recurrent—fees for paying late could indicate anything from cash-flow problems to ineffective management. Look at bank statements too; deposits and checks should be fairly consistent month to month.
- Sharply rising overhead cost. Despite your best cost-cutting efforts, overhead cost will continue to rise along with inflation. Monitor your expenses by categories like personnel, facility, office supplies, and medical supplies. Compare costs month to month and from year to year.
- Inconsistent reporting. Without current data, you simply can’t monitor the financial indicators previously listed.