As the owner of a mental health practice, your priority is helping your clients lead happier and healthier lives. Of course, you can’t serve your clients if your practice’s finances aren’t in order.
Likewise, building wealth for your mental health practice requires having a strong financial plan.
With the right strategies in place, you can focus on building wealth long-term while continuing to provide your clients with the highest standard of care.
So, where should you begin? We’ve got some strategies you can get started with today.
Start With Building a Financial Plan
While the thought of building a financial plan for your mental health practice might seem daunting, it doesn’t have to be. In fact, a financial plan is really just an outline of the practical steps you need to take in order to achieve your short- and long-term financial goals.
With this in mind, many people find it helpful to simply determine how much wealth they need to earn and then work backward from there.
You might calculate, for example, how much money you need to live a comfortable lifestyle. From there, you can break that amount down into annual, quarterly, monthly, and even weekly revenue goals. Many mental health practice owners will even calculate their session prices based on these numbers.
From there, your other wealth-building goals can be set with the intention of reaching your revenue goals.
Focus on Cash Flow
In order to build wealth, you have to build a successful business—and a strong cash flow is a solid indication of a healthy business. Simply put, you want to make sure that you always have more money flowing in than going out.
So, how can you start focusing on cash flow in your mental health practice? Some tips include:
- Keeping detailed insurance records (this way, you know exactly how much you’re getting from the insurer and the patient).
- Maintaining updated client records (to protect against inaccuracies that could impact your bottom line).
- Keeping claims, EOBs, and payments all in one place (to streamline the process).
Managing Accounts Receivable is a Big Part of This
For most mental health practices, accounts receivable is where you’ll see the biggest influx of money coming into your business. If this area is lacking, then your cash flow will almost always be suffering. As a result, you won’t reach the revenue goals that you laid out in your financial plan.
To improve this area, always be sure to send invoices to your clients right away. Follow up on overdue payments, no matter how big or small they may be. Likewise, make sure that it’s easy for your clients to pay their bills. If you don’t already have a platform set up to accept online bill payments, it’s time to implement one.
Build a Comprehensive Budget
In the mental health care business, you encounter a lot of different expenses on a daily basis. If you don’t have a solid means of tracking and managing your spending versus how much money your practice is bringing in, you could be setting yourself up for failure.
You can build a budget for your mental health practice in the same way you’d build a personal budget.
This means taking the time to review your most common and recurring expenses versus how much revenue your practice is generating. From there, you can aim to cut spending in certain areas by setting weekly or monthly budget allowances for different categories (such as advertising/marketing or supplies).
Include Debt Repayment
When building a comprehensive budget for your mental health practice, don’t forget to include any debt repayments you may be making.
Most mental health practices will have some form of debt, and eliminating it should be a priority so that you can focus more on building wealth. With this in mind, debt repayments should be an extension of your budget.
Don’t Forget to Include Your Tax Obligations
Likewise, be sure to include your tax obligations in your budget. From payroll taxes for your employees to taxes you may be paying on your building, factoring these in will help you avoid owing money come tax time. Unfortunately, tax obligations are often overlooked by practitioners when building a budget, so don’t make this mistake.
Build a Strong Tax Plan
Having a strong tax plan is by far one of the best ways to save money and make the most out of the money you already have. From retirement planning and tax credits/deductions, it pays to have a tax strategy in place. Otherwise, you might be leaving money on the table.
Bring Your Finances to an Experienced Accountant
Still feeling overwhelmed in your efforts to build wealth as a mental health practice owner? It may be time to consult with an accountant who has specific experience working with professionals in the mental health field. How you run your practice now affects your long-term wealth, so reach out to a knowledgeable accountant for help today.