5 Takeaways on Pharmacy Cash Flow

Cash flow is important to every business. For many independent pharmacies it’s a serious issue.

Sometimes factors outside of our control cause short term cash flow problems. For those situations, financial management strategies, like this list from Lisa Faast, can help alleviate the stress until you can move past whatever circumstances have caused your cash flow difficulties.

But what about chronic cash flow problems? When month after month, you’re experiencing financial stress due to cash flow in your pharmacy business. Are there proactive changes you can make?

We recently sat down with Craig Robinson from RxCherryPick to talk about some pharmacy cash flow concepts they use to help pharmacies improve cash flow, profits and working capital.

You can watch the full session here, or keep reading for our favorite takeaways.

Cash flow and profitability aren’t the same thing.

Although cash flow and profitability share some common threads, they aren’t inextricably tied to one another. While it’s not often talked about, you can be profitable and still have cash flow problems. Being mindful of this is important for every business.

Distinguish between cash flow and liquidity.

There is definitely a difference between cash flow and liquidity. You may have a loan, or line of credit, with easy access to funds. But that’s not cash flow. Cash flow does impact liquidity, but they aren’t the same thing, and the distinction is an important one to make.

Rebate models were king. But they might not be any more.

Rebates used to offer a powerful benefit for pharmacies. There was so much competition for pharmacy business, and rebates offered an incentive that it made sense for pharmacies to take advantage of.  In recent years, things have definitely changed. And when it comes to cash flow, there are definitely downsides as rebate money is coming from someone else’s account. Rebates in the future, are really the opposite of cash flow.

Stepping away from rebates gives you transparency.

If you step away from a rebate model and go instead with the invoice price, you remove the mystery. Going with what’s on paper and what you’re billed at lets you know exactly what you’re paying.

Learn more about cash flow and rebate vs. transparent models at CLIMB

Craig Robinson is joining us again for a deeper dive into some of these concepts on August 12th. Sign up to attend the live broadcast at 8am Eastern or the rebroadcast at 11am Eastern using this link.