Have you ever looked at your practice bank account and felt a sense of whiplash? One day it’s flush with cash, and a few days later, a massive chunk is gone, leaving you to wonder, “Can I even pay myself this month?”
That cash flow rollercoaster is incredibly stressful. As your practice grows, adding associates or multiple locations, this problem doesn’t just get bigger—it becomes exponentially more critical.
Today, we’re diving deep into proactive cash flow planning. These are concrete, actionable strategies to smooth out those wild swings, give you a true sense of financial control, and build a more robust, profitable practice that serves you, not the other way around.
Strategy #1: Control the Timing of Your Expenses
The most impactful thing you can do is not just cut costs, but strategically control the timing of your cash outflow.
The biggest culprit is payroll. Most practices run payroll twice a month (e.g., on the 5th and 20th). The problem is, those dates can land on any day of the week. If a payroll date hits over a weekend, the money is often pulled from your account on the Thursday or Friday before your biggest insurance deposit days (typically Monday and Tuesday).
This creates a massive, unnecessary cash crunch.
The Solution: Bi-Weekly, Timed Payroll
Switch your payroll from bi-monthly to bi-weekly, running it every other Wednesday. This small shift ensures your large Monday/Tuesday deposits are in your account before your biggest expense is paid out. It’s a simple change that makes a world of difference.
Apply this logic to your other large expenses—loan payments, rent, major supply bills. Map them out on a calendar and set up a system where you are not paying multiple large bills in the same week as your payroll. This creates incredible predictability in your weekly cash outflow.
Watch the full breakdown of these powerful cash flow strategies.
Strategy #2: Use the “Low Point” Method for Owner Pay
Stop trying to pay yourself based on a confusing and often lagging P&L statement. Let your bank account tell you the real profit. I call this the “Low Point” method.
- Identify Your Low Point: Look at your expense calendar and identify the point in the month when your bank account balance will naturally be at its lowest. For most, this is right after the largest payroll cycle. This is the only time you will disperse profits.
- Establish Your Buffer: You need a cash buffer in your account at all times. I recommend a buffer equal to one full month of your practice’s operating expenses. If your monthly overhead is $75,000, your buffer is $75,000.
- Disperse the Excess: At your designated “low point,” after all expenses have cleared, any cash in the account above your buffer is your true, distributable profit.
- Example: At your low point, you have $130,000 in the account. Your buffer is $75,000. You can safely pay yourself the difference: $55,000.
This method is simple, reliable, and prevents you from ever accidentally taking out money the practice needs for upcoming expenses.
Strategy #3: Standardize Your Working Days Per Month
Your rent, loan payments, and salaries are fixed monthly costs. They don’t care if you work 15 days or 22. This variability in working days creates havoc with your production numbers and cash flow.
The Solution: Plan Your Year for Consistency
Before the year begins, map out your entire calendar with holidays and planned time off.
- Count the number of working days in each month.
- Identify the months with the fewest working days.
- Strategically add a working day back into those shorter months. If you lose a Monday for a holiday, plan to open that Friday. If February is short, add an extra Friday.
Adding just a couple of days to your shorter months does wonders for smoothing out your production goals and creating consistent, predictable cash flow.
A Note on Credit Cards
I am not a fan of using credit cards for primary practice expenses. It creates a false sense of security all month, followed by a massive cash crunch when the bill is due.
If you absolutely must use one, do not let the balance build up. Make at least two payments a month to mimic a more consistent cash outflow and avoid that end-of-month whiplash.
These strategies might seem small for a single practice, but as you grow, this level of diligent cash flow management will absolutely make or break you. Stop riding the rollercoaster and start building the predictable, profitable practice you deserve.
