Planning for 2021
We hope that you have managed to catch your breath over the holiday period and taken time to congratulate yourselves and your team for a job well done during a difficult 2020. The news over the past week of possible community transmission cases in Northland, however, has reminded us that we all need to be prepared – as individuals and as businesses - to continue to be vigilant against COVID-19.
If there’s one thing the past year has taught us, it’s to be well prepared for the unexpected. That goes beyond having alternative ways of delivering services should we be forced back into lockdown; it includes being financially prepared as well.
If it’s been a while since you last reviewed your financial preparedness, here are a few points to consider:
Profitable services and sales
Maintaining profitability relies on providing profitable services and, and if applicable, knowing which lines of stock are most profitable.
The keys to profitable services:
- Know the true cost and profitability of all the services provided in the practice;
- Have a clear (and profitable) fee schedule for all services; and
- Make sure that all services are charged for and invoiced at the correct rate.
Cash is king
Business profitability is important to support growth and long-term survival but managing cash flow is essential in tough times. Profitable businesses can still fail if there isn’t sufficient cash to meet the short-term business commitments. To best manage your cash flow, prepare a cash flow forecast.
The principals of successful cash management are:
- Receive cash as quickly as possible;
- Part with cash as slowly as possible – subject to contractual and legal requirements; and
- Hold as little cash on hand as possible.
Focus on asking patients or clients to pay at the time of consultation, and chasing up outstanding invoices .
- Create a culture of “paying-on-the-day” by making people aware that this is expected. Post notices in your clinic reminding that payment is expected on the day;
- Don’t be afraid to tell your patients or clients how much the service will be – people don’t like surprises when it comes to money;
- Make it easy for people to pay. Streamline processes at the front desk and have as many payment options available as possible – cash, eftpos or credit card;
- Follow-up outstanding invoices quickly and regularly. Most debt older than 90 days is unlikely to be collected, so regular follow-up is essential.
Good staff are your greatest asset
Delivering outstanding service relies on good leadership and teamwork. Success relies on recruiting, retaining and developing the very best staff and this is especially so in difficult times.
Dealing with poor performance or disciplinary matters can have a huge impact on any small business. The well-known phrases “one bad apple spoils the barrel” and “a team is only as strong as its weakest link” are especially applicable to a small business environment. The direct financial impact of getting the process wrong in disciplinary matters can be significant.
- Create an environment where staff are motivated to do the right thing and are capable of doing it. To do the right thing staff need the required knowledge and skills, for example, customer service training.
- Set clear, realistic expectations and provide regular, honest, and timely feedback to staff.
Many of us will have had our resilience sorely tested over the past 12 months - the constant uncertainty and change is wearing.
While New Zealand is in a very privileged position compared with the rest of the world, it is completely normal to feel anxious about what 2021 will bring.
Your staff may have their own strategies in place to help them deal with anxiety and uncertainty. But you can provide extra support by:
- Supporting healthy lifestyles. Are there practical things you can do to support their health and wellbeing, such as supplying fruit in the office kitchen, encouraging walking groups at lunch, promoting local fitness activities?
- Prioritising psychological wellbeing. Promote a culture that encourages colleagues to check in on each other about their mental wellness, and make sure you have a plan for helping staff who aren’t doing so well.
- Fostering a supportive culture. Show your appreciation for jobs well done, especially during tough times.
- Encouraging a healthy work-life balance. This can be hard in a busy practice environment but ensure people take regular breaks and encourage annual leave when appropriate.
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