Five places to pinpoint shrinking cash flow

Practice Pointers. By Karen S. Schechter, AMNews contributor. Sept. 17, 2001.

PRACTICE POINTERS

Answers to questions about the business side of your practice

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Question Our practice's cash flow has been diminishing over the past several months. But our productivity remains the same, if not better, and our billing and collection staff seems to be working hard. Where should I look for problems?

Answer There are five primary areas your practice should investigate: cash controls, billing, collections, accounts receivable management and managed care contracts.

Cash controls. First, compare the monthly patient revenues posted in the billing system to the amount that is posted in the general ledger. The totals should be the same. If not, the differences should be reconciled.

If the amount in the general ledger is less than that on the billing report, it could mean there are posting errors in the billing system or that deposits are not being posted to the general ledger. This would have an obvious impact on cash flow reports.

Regardless of whether one report's totals are greater than another, further investigation is required to determine why there is a discrepancy.

To do this, look at each daily close and confirm that the total payments per the superbills, receipts and check copies equal the amount posted to the billing system, the amount listed on the bank deposit slip and on the associated bank deposit receipt.

You may take it a step further by comparing the billing system end-of-month figures with the reconciled bank statement. Ongoing discrepancies indicate that formal cash management controls should be implemented and monitored daily. [...]