Medicine is your strong suit. But how about when it comes to managing money?
Even if you have an accountant, as an independent community pharmacy owner, you regularly deal with your business’s financials. Creating budgets, examining payroll and being knowledgeable of your pharmacy’s sales cycle are just a few of the many responsibilities you take on.
It’s fine if you’re no financial guru, but it’s important to remember that any business can struggle without proper money management.
Keep track of the financial side of your pharmacy by following these seven money-saving tips.
1. Make a budget
Every business runs on a budget, and your independent community pharmacy is no exception.
It’s crucial to make a list of expenses and know your pharmacy’s sales cycle to be able to create an accurate budget. Employees’ salaries, mortgage payments for your pharmacy’s building, taxes and utilities are just a few of the items you should include on your budget’s expense list.
Also, budgets aren’t a one-time thing. Be sure to routinely update your financial plan.
If you’re not sure where to start, the Service Corps of Retired Executives (SCORE), a partner of the U.S. Small Business Administration (SBA) that counsels America’s small business owners, offers easy-to-follow financial templates.
2. Spend smart
This may seem like a no-brainer, but spend your money conservatively.
For example, if your prescription profits aren’t as high as normal in one sales cycle, it may not be a good idea to invest in automation during that specific time period.
If you take on too much overhead, or if costs inflate at a much higher rate than your revenue increases, your financials could slip into the red. Always look back to your budget’s essential and non-essential expenses to see where you should be spending your money.
3. Examine your payroll
Payroll is likely a big expense at your pharmacy. Look for ways to reduce costs.
Is internal payroll staff costing your pharmacy? Invest in an out-of-house payroll service. Are you spending money printing invoices for employees’ paychecks? Require your employees to be paid via direct deposit.
Minimizing these expenses associated with payroll can help your business save money in the long run.
4. Cover the cost of processing fees
More than likely patients use credit cards to pay for their prescriptions and other products and services at your pharmacy.
Simply put, credit cards cost your pharmacy money. Different cards charge different processing fees, and it’s critical to ensure that your pharmacy isn’t losing money because of them.
To keep your pharmacy’s financials in the clear, increase the price of goods and services you offer. Offering discounts to patients who pay in cash is another way to save your pharmacy the loss of a processing fee. Even the slightest increase in price can help save your pharmacy its hard-earned dollars.
5. Earn a better cost of goods
Strategic purchasing is key to your pharmacy’s financial success.
Finding the best cost of goods for your pharmacy matters today more than ever. And, independent pharmacies can agree that saving money starts with purchasing better.
When you want to improve your purchasing, negotiation is crucial. ProfitGuard by PBA Health, a pharmacy services organization based in Kansas City, Mo., handles the negotiation process for independent pharmacies.
ProfitGuard is a service that manages primary wholesaler negotiations to get pharmacies the best overall cost of inventory.
The contract negotiation experts with ProfitGuard work to secure independent pharmacies with better pricing, rebates, and payment terms on their primary wholesaler contracts. They negotiate across four major wholesalers to get pharmacies a true market-competitive contract.
ProfitGuard also provides proprietary purchasing tools that maximize wholesaler rebates and item-by-item savings automatically. ProfitGuard members have averaged between $70,800 and $212,400 in annual savings on their cost of goods.
“It’s the industry game changer for the independent pharmacy owner or operator,” says Huy Duong, owner of Dale’s Pharmacy in Colorado. “There’s nothing out there like it on the market.”
In the case that your primary wholesaler doesn’t have what you need, you’ll need a reliable secondary supplier waiting in the wings.
BuyLine®, an NABP-accredited secondary supplier, offers a full line of brands, generics, OTCs, and controls at the lowest prices in the secondary market. In addition to having low list prices, BuyLine also rewards purchases with cash rebates and significant discounts on brands. Earn up to an additional 10% cash rebate on generics and up to WAC -4% on brand.
With online ordering and next-day shipping options, shopping with BuyLine is quick and convenient. There are absolutely no commitments with BuyLine — no fees, no contracts.
6. Improve your cash flow
Improving your pharmacy’s cash flow, the total amount of money transferred into and out of your business, is also a necessary step to ensure your business is sustainable.
Good cash flow means that you have enough money on hand to pay the bills when they need to be paid, and you don’t have a lot of debt accumulating on your balance sheet.
(Follow these tips to help your pharmacy improve cash flow.)
7. Pay attention to your bills
When it comes to managing your pharmacy’s finances, follow similar steps to how you manage your personal expenses. It can come in handy.
One such case is making timely payments. Don’t forget to pay your bills on time. Or, even pay bills before they’re due. This can save your pharmacy the hassle of late fees and keeps your credit in check. Be sure to spread apart your payments so that you’re not paying every bill at once. This will give you some extra wiggle room with your money throughout the month, instead of owing everything at once.
In addition, it never hurts to ask your creditors if they offer discounts for paying bills earlier than their due date.
Learn about the top 8 financial tools for pharmacy businesses.
