Cash Flow Management for Optometry Practices

Three Forces Working Against Predictable Cash Flow

Optometry practices face a particular combination of cash flow pressures: cash goes out for frame stock well before it's sold, Medicare and HICAPS payments lag behind the actual sale by days or weeks, and patient demand spikes seasonally around health fund year-end. Together, these make the bank balance a poor guide to the practice's real financial position.

Frame Stock Ties Up Cash Early

Every frame ordered from a supplier is cash out the door before it's sold. A practice holding too much slow-moving stock has real cash tied up on the shelf that isn't available to cover rent, wages or super.

Settlement Lag from Medicare and HICAPS

The sale happens at the point of consultation or dispensing, but the cash from Medicare and HICAPS settlements lands days later in a batch. This timing gap needs to be factored into any cash flow forecast, not assumed away.

Seasonal Demand Around Health Fund Limits

Many patients use up remaining health fund limits before their fund year resets, creating a predictable seasonal spike. Treating that spike as the new normal, and overcommitting to expenses based on it, is a common mistake.

A Better Way to Forecast

A rolling 13-week cash flow forecast that accounts for stock purchase timing, settlement lag, and seasonal patient demand gives a far more accurate picture than watching the bank balance day to day.