Important Items Impacting Your Pharmacy’s Revenue Line
By: Christy Fasciana
Running a successful independent pharmacy requires specialized knowledge and a lot of hard work. In addition to properly dispensing medication and providing exceptional customer service, you need to conduct the business side of your operation.
Today we want to talk about just that: the business side of running an independent pharmacy. Specifically, we are going to take a look at business revenue and the important factors that have a big impact on it.
The first key to a strong pharmacy revenue line is simple: awareness of your revenue and financial position. Your revenue directly impacts profitability and other key performance indicators.. Failure to be aware of your revenue position makes it hard to know how you stand in the industry or to make good decisions for your business. If you do not know how much money you are making, you cannot plan for your expenses or growth.
- Accounts Receivable
Revenue and accounts receivable impact one another. As such, maintaining your accounts receivable by keeping billings timely, making sure everything is current, keeping payment turnaround less than 90 days, separating out any specialty lines, and cleaning up the account is key. You—or a trusted teammate who is capable of monitoring your accounts receivable—should be sure to perform weekly reviews in order to stay on top of your accounts receivable. Having an accurate accounts receivable balance will also enable better cash planning.
- Direct and Indirect Remuneration (DIR) Fees
As you are well aware, pharmacy remunerations come with various fees. By default, the money that you receive for your remuneration claims is net—the fees are not separated out. However, the amount of DIR fees you are dealing with is important information. You should be sure to adjust how you are recording bank deposits in order to figure out what your gross revenue would look like without the fees already taken out.
- Specialty Lines
Pharmacies that participate in specialty programs should make sure to separate out the data regarding those programs into individual revenue streams. The easiest way to do this is through your Point of Sale (POS) system. Once the separate data from your POS system gets moved into your accounting software, the specialty programs each become their own separate line item, which allows for revenue tracking.Why is separating out specialty lines so important? It is because doing so allows you to see what percent of overall revenue is related to each specific segment. That way, if you are participating in a program and you see that it is not benefiting your pharmacy, you can choose to opt out of it. The best way to make sure you are spending your time efficiently is to track and analyze your data.
As a pharmacy owner, you have a lot on your plate. On top of ensuring the creation of a quality pharmacy team and the maintenance of excellent client service, you must also coordinate the operational side of your business.
While some pharmacies can afford to employ someone internal to take care of their accounting details, many independent pharmacies are not big enough to merit bringing on a fulltime bookkeeper, operations manager, or CFO. That’s where we come in. We are eager to partner with you in maximizing the efficiency of your financial operations. We can help with all of the items listed above and more.
Are you interested in an evaluation of your accounting systems? Contact us today to get the conversation started.