Monday, January 20, 2014

Accounts (Payable and Receivable)

I try to encourage HME/DME providers to be fully aware of the little things, which make up asset control. At Medtrade and state DME association meetings, I have attended many lectures on this important topic.

There are two major problems; both must be very carefully monitored. To attain good asset control, “accounts receivable” (A/R) and “accounts payable” (A/P) must be watched. Without full diligence of them, your cash flow will be greatly affected. The lack of full control of both has sunk many a business.

Since I have had contact with many dealers, I can say that as a group, DME/HME principals take the best care possible in our wildly gyrating industry. They very carefully study their A/R and A/P together with their accountant.
Accounts receivable simply is the money due to you for the services and products your company provides. In our industry, a good deal of A/R is from Medicare, Medicaid or a third party! Great care must be taken to assure that all the paperwork is 100% correct. Many DME/HME dealers have this task assigned to a member of their staff who stays updated with the payers. Before submitting any forms for reimbursement, it is vital to review everything.  
Accounts payable is what is owed by your company; salaries, supplies, taxes, and even include the coffee pot you keep warm all day. Be sure that every penny you spend is necessary. At a lecture I attended a few years ago at Medtrade in Atlanta, the speaker asked one of the attendees if he brought in doughnuts for his staff. The answer was: “Of course I do, my employees have earned that.” A few questions later he admitted that close to half of the goodies were usually thrown out.
When I spoke to that particular dealer a few months later in Las Vegas, he told me that now it is only on Monday mornings that he comes in with some goodies. He made this occasion into a “staff meeting.” He reported that this enables him to better guide and control everything. 
The key person to help you stay in charge of A/R and A/P is your accountant. He can show you the best way to control the cash flow of dollars. You must be in charge and fully cognizant how every penny is spent and ever dollar is saved.
It is easy to spend money, but it is important to spend wisely!

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