How do you manage the financial aspects of your behavioral health business? The answer to this question is critical to the sustainability of your organization or private practice. This article is the first in a 3 part series on minding your financial business. Having a regular, routine process in place of reviewing business expenditures is extremely important to your financial health. In reviewing your monthly expenses, match up your actual expenses to your budgeted expenses in order to identify where you are incurring unexpected expenses. This process is critical to:
- Provide a check and balance to ensure money is being spent properly
- Help you to identify if you are staying within your budget
- Helps you to see what potential expenses need to be cut in case revenue projections are lower than expected or if funding is unexpectedly cut or reduced.
- Keep your business from experiencing surprises such as fraudulent activity stemming from stolen credit cards or a hacked account.
- Helps to make sure your spending is aligned with the goals and objectives of your business.
Just like in personal finances, dedicating the time and diligence to a regular review of business expenses helps you identify spending trends and make informed financial decisions. An example of this in practice is, Private Practice ABC determined that the business would have to reduce expenses by $10,000 in order for it to meet its financial obligations for the quarter. As a result, the business conducted a 60 day review of its budget and expenses to determine spending patterns. This process included reviewing each line item of their budget and expense statement for the past 60 days. After the spending patterns were determined, adjustments were made according to the priority of each expense. Their adjustment review process included prioritizing their expenses, determining what needed to be deferred to a future date, identifying what needed to be reduced or canceled, and reviewing projects that needed to be outsourced in order to reduce their overall spending. After this business exercise was completed, Private Practice ABC realized that it needed to implement a purchasing control process in order to stay within its budget and continue to meet its business obligations going forward. The purchasing control process would help the business to avoid unnecessary purchases. There is a great bookkeeping resource entitled, "The Biggest Bookkeeping Blunders That Clinicians Make and Their Solutions", that will help your business to avoid bookkeeping mistakes.
About the Author:
Monica Akerele is a native of Charlotte, NC and currently a Graduate Assistant for the Provider 360 collaborative with UNCC and Cardinal Innovations Healthcare. She has over 12 years of business management and supervisory experience gained while working in the Corporate sector. She left the corporate world to pursue her passion of a career in Social Work.