Cashflow: Why It Matters to Your Home Care Business and What Are Your Options

Historically, most Home Care agencies have done their billing “in arrears”, which means that they bill for shifts after they’ve happened. This is common practice and somewhat convenient because the schedule is a known quantity and can be invoiced without too much fuss. As long as the schedule is adjusted and corrected before the invoice is made, the customer will be billed properly.

Cash drawn in markersIt may be convenient, but, as any business owner can tell you, the big problem with billing in arrears is that you end up having to pay your employees BEFORE you get paid by your customers. That means you have to finance payroll with reserves, a line of credit or some other kind of loan, or even risk not making payroll. It may  feel like your ship is always sinking. This a great example of a cashflow problem.

Taking Deposits

A common way of improving the cash flow situation is to take deposits. At the start of service, a customer pays a deposit, much like a renter would pay a security deposit when they start renting a home. This is usually some set amount, possibly based on the expected level of service they’ll be getting.

This can function as a nice cushion for an agency’s cash flow, but care must be taken to ensure that, at any time, that can either be returned or applied to the last services a customer gets. When an agency is young and margins are very tight, this can be a danger.

Billing in Advance

Wouldn’t it be nice if you could bill your customers ahead of time and use that money to pay your employees? You can bill customers in advance, as long as you can keep track of things well. Many of our Rosemark System customers do it in just this way.

Billing in advance inevitably involves adjustments to the bill, as the reality of what happens differs from what was paid ahead. This is true in any industry, but in Home Care especially, the most complicated and convoluted changes to the schedule are bound to happen.

That means that, with each billing cycle, a rigorous analysis of what was billed vs. what actually happened must be done. The new set of shifts has to be billed along with all the credits and new charges that result from those changes. Doing this manually is time consuming, confusing and prone to error.

Rosemark’s Advance Billing Features

With the right tools (software), it doesn’t have to be a big headache to bill in advance. Rosemark provides automatic invoice adjustments based on changes to the schedule. If you bill for 5 shifts next week and it ends up being only 4, they get a credit; if they add shifts so it ends up being 6, they’ll get additional charges. Even if the changes involve adjusting the duration or rates of the shifts, these will be accounted for. And these adjustments will be clearly laid out so they don’t have to wonder why their bill changed.

But I Don’t Bill In Advance…

That’s OK. Rosemark’s automatic billing adjustments is a powerful feature that will save time and prevent headaches even for those agencies that don’t bill in advance. All your staff has to do is keep the schedule up-to-date and accurate and the adjustments take care of themselves. Customers feel more confident in you because they know what’s going on, and they see that, even when a mistake was in your favor, they can trust you to correct it.

Now you’ve got cash flow and there’s wind in your sails!

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