Community pharmacies, like any business, face financial challenges, and one significant concern is managing cash flow.
Your business requires cash flow to pay for stock, suppliers, operational costs, taxes and service bank debts and these need to be matched with cash inflows
from NHS remuneration, Over The Counter (OTC) sales and HMRC VAT refunds otherwise you could find yourself in a vicious circle.
If cash flow is not monitored, you will find the business juggling to settle its liabilities as they fall due. If suppliers are not paid on time, they will not
send vital supplies which in turn results in customers going elsewhere. If staff/locums are not paid on time, your patients will suffer due to lack of staff or
even poor service levels from demotivated staff. HMRC can issue debt recovery proceedings against the business if debts remain unpaid. Lenders will be keeping a
keen eye on the management accounts to ensure the business remains strong and is able to settle its financial obligations as they fall due.
Let’s explore how UK community pharmacies can identify potential cash flow problems and implement strategies to navigate these challenges effectively.
Dispensed items
If you are experiencing a drop in the average number of items you are dispensing over time, then it could mean customers could be going elsewhere. Loss of customers
will mean less income for the business, and it is always difficult to get them back especially when they have gone to a local competitor. You need to keep an eye
on this indicator and investigate any drop in numbers. Implement alternative strategies as to how you may increase this for example through partnerships with local
community centres, GP surgeries, colleges, etc.