In times of economic uncertainty, when your therapy practice’s revenue may change from one month to the next, maintaining steady cash flow is key. 

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You need cash in hand to cover operating expenses like rent, utilities, and software subscriptions. And when you don’t have it, you may find yourself turning to a line of credit, credit cards, or even your personal funds to keep your business afloat.

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Whether you’re already experiencing cash flow shortages or simply preparing for rocky times ahead, here’s what you can do to keep the money moving.

Set up an efficient billing solution

With so much on your plate as a business owner, you may find your billing cycle begins to languish. You have notes to write and review, emails to respond to, and bookkeeping to catch up on. It’s easy to let tasks like filing insurance claims or preparing superbills fall by the wayside.

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An efficient, automated or semi-automated billing solution solves that problem. Your EHR software likely already includes billing features. If you haven’t taken the time to set it up and incorporate it into your workflow, set aside a few hours to get the job done.

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If you don’t have an automated billing solution, consider your options and then choose one. The easier it is to manage billing, the less likely it will drag you down.

Compare payment processors

Many payment processors allow you to be paid in advance. That is, rather than waiting for payment to clear or an insurance company to send you reimbursements, you can take an advancement payment now and—for a small fee—your processor will accept the true payment later.

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Take the time to review the options offered by your current processor and then—if the terms are favorable—set up advance payments.

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If your payment processor doesn’t offer this option, shop around for one that does. Even if it costs you a portion of your income upfront, advance payments can make your finances more manageable by guaranteeing you have cash on hand to cover your expenses.

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Offer monthly billing at a discount

For cash pay clients, you can reduce the amount of footwork you need to do to get paid—and make your cash flow more predictable—by billing on a monthly basis.

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If you treat a client on a biweekly basis, switching from per-session billing to a monthly fee reduces the number of bills you need to send, process, and track by half. And if you switch all of your cash pay clients—or even a sizable majority—to monthly billing, you can make cash flow more predictable: Bills go out on the same day each month and payment (hopefully) follows soon after.

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You can incentivize clients to choose this option by offering a small discount on their bills. It could be a minor price to pay in exchange for simpler cash flow.

Carefully schedule recurring expenses

When you have multiple recurring expenses due to be paid on different days each month, your accounting and cash flow tracking can become hard to manage. It can feel like you’re constantly dipping into your working capital to cover expenses as they come due. If cash flow is tight or if revenue takes a hit, you may find yourself coming up short.

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Invest some time planning your recurring expense payments so they sync up with your billing cycle. For instance, if your payment processor pays out your total at the end of each month, schedule your recurring payments so they’re due on the first day of the following month. That way, you have cash on hand to cover all your recurring expenses at once.

Plan for major annual expenses

Expenses like insurance premiums, membership in professional organizations, and annual software subscriptions only come once a year. But if you don’t plan for them in advance, they can seem to arrive suddenly and put a major strain on your cash flow.

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Create savings accounts for your annual expenses and contribute to them gradually throughout the year. For instance, if you know you will need to pay a $600 insurance premium each year, contribute $50 per month to a fund dedicated to that expense.

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Effectively, you’ll be turning your annual expenses into monthly expenses. Doing so helps make budget planning and financial projections simpler. When an annual bill arrives, you can take it in stride rather than scrambling to come up with the cash.

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For an in-depth guide to planning and handling financial ups and downs in your therapy practice, check out Managing a Therapy Practice During Economic Uncertainty.

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This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult their own attorney, business advisor, or tax advisor with respect to matters referenced in this post.

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Bryce Warnes is a West Coast writer specializing in small business finances.

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