02 Oct Cash Flow Pains? Here’s What Your Pharmacy’s Books Might Be Hiding
In the world of independent pharmacy, managing cash flow can feel like a constant balancing act. Even when revenue looks healthy, cash shortages can still happen—leaving owners scrambling to cover payroll, pay vendors, or reinvest in their operations. If this sounds familiar, the issue may not be with your sales volume, but with what’s lurking beneath the surface of your financials.
Here are a few common, often-overlooked issues that might be hiding in your pharmacy’s books—and what to do about them.
1. Hidden Inventory Imbalances
Inventory often represents a large portion of a pharmacy’s working capital, and mismanagement can tie up significant cash. Over-ordering, slow-moving products, or manual tracking methods can create discrepancies between what’s on the shelf and what’s reflected on paper. These discrepancies can result in unnecessary purchases and cash strain.
What to watch for: High inventory turnover ratios that don’t match cash flow performance, or a growing inventory balance on the balance sheet without a clear increase in sales.
2. Inconsistent or Delayed Reimbursements
While revenue may look strong on the income statement, cash flow can be delayed due to slow reimbursements from PBMs or third-party payers. Without tight monitoring of accounts receivable, it’s easy to miss just how much money is tied up—and how long it’s taking to collect.
What to watch for: A growing accounts receivable balance, delayed remittances, or inconsistent reimbursement timelines.
3. Untracked Owner Draws and Personal Expenses
It’s common for pharmacy owners to take draws instead of salaries—but when those withdrawals aren’t tracked properly, they can create confusion in the books. Over time, this can distort your understanding of the business’s actual cash position and profitability.
What to watch for: Unrecorded or lump-sum owner distributions that don’t appear consistently in financial reports.
4. Unreliable or Outdated Financial Reporting
If your financial statements aren’t current or aren’t reviewed regularly, it’s difficult to spot trends, identify issues, or make informed decisions. Inaccurate or outdated data can mask cash flow problems until they become critical.
What to watch for: Financial reports that lag by more than a month, or reports that don’t clearly separate cash flow from profitability metrics.
5. Poor Expense Categorization
Misclassified expenses can distort financial data and affect budgeting and forecasting. Without clear categories, it’s tough to track where money is going—and where adjustments can be made.
What to watch for: Broad or vague expense categories, or frequent use of “miscellaneous” entries.
How Blackman & Sloop Can Help
Cash flow issues often come from hidden inefficiencies, not just low revenue. Knowing where to look and having the right systems in place to keep your financials accurate and clear is essential. At Blackman & Sloop, we work with independent pharmacies to clean up bookkeeping, improve cash flow forecasting, and provide outsourced controller services—helping you gain control of your numbers and build a more stable and profitable future.