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24: Cash Flow Basics for Speech Therapy Private Practice

When you have a speech therapy private practice, you’ve got to have cash in the bank to operate appropriately.  Keep in mind, if you don’t have enough money to cover your expenses, then you’re really working for someone else, and that someone else is the bank.  In this episode, I discuss the basics of cash flow, AR and billing  for speech therapy private practice.

In this episode:

01:02 – + 11,866 listeners
02:58 – Importance of asking questions
04:31 – The Perfect Student
05:05 – Cash Flow: Billing and AR
07:28 – Closed internet communities
10:36 – Cash flow is money movement
13:25 – Importance of cash in the bank for operations
13:50 – More about 1099s + taxes


Anybody can bill, billing is the easiest thing in the world but it’s how you get that money it’s called AR. That’s when you get the money and follow up after you bill.


Well, Hello everyone! You’re listening to the Speech therapy Private practice Startup Podcast; this is episode number 24. My name is Kyle Meades and I’m a speech pathologist since 1993 and these podcasts are designed to help you improve your business and your life one podcast at a time.

Welcome back to the show everyone today is Tuesday morning, March 21st 2017 and as of today we have over 11,866 listeners to the show and its really nice to have you guys on-board and if you are new to the show Welcome. And thanks again for all the questions and comments. Keep them coming in. And I really appreciate it. Right now when you’re looking at the demographics of the show lets say from the worldview, you have the United States listening, UK, Australia, Canada, India, Japan, Singapore, Israel and the Philippines. Now when you breakdown the United States some of the Top states that are listening in is California, Texas, Arizona, New York and Florida. Then we’ve got Pennsylvania, Illinois, Georgia and Massachusetts. So it’s really cool to have you guys listening, and again if you are new Welcome to the show.







As always if you need some questions answered about your Private practice or if there is something you just want to talk to me about, go to www.privateslp.com/contact and there is a link to send an email to me. Also at the bottom of the page there is a little SpeakPipe application where you can send a voice message directly to me, nobody else would hear that. And right now its setup for it will come right to my Inbox. So if you want to ask a lengthy question and you just don’t want to type that out because I hate emails and I hate typing. A lot of time I just like to speak and let things get transcribed. So if that something you would like to do just go to the bottom of the Contact me page, there is a SpeakPipe application and you just hit Start recording, and you just say what you want to say or ask me your question. I’ll take that question out and answer for you.

I wanted to remind you guys this is a really need thing where you can ask questions and get the feedback that you are looking for when it comes to starting a Private practice, because when I was starting out my own business there wasn’t much out there we have some PDF files we had a few things on the internet about Speech therapy Private practice, but it was very rare. There were a lot of things like on Chiropractic and physical therapy, a couple of things on occupational therapy there were a few older books out there on Private practice, Speech pathologist and things like that.

If I would have the ability to work with another Speech pathologist hand in hand I would have paid a lot of money to do that. I would have gotten on a plane and travel just to see how a clinic runs, how the billing aspect works (that’s the most important thing) or how you bill it, how do you collect it, how do you get all of that money so you can afford to stay in business. I learned the hard way I had to make some mistakes along the way. I lost multiple thousands of dollars doing it my way. And the first time I did this I mean it was really hard it’s not like you open up your own Private practice Office and you just have this big pot full of money. No for me I had to make mistakes, I had to bill, I had to see people and sometimes I just didn’t get paid. I had to eat it and it didn’t taste so good at that time. And I remember like I how am I ever going to get this done, how am I going to crack this code, how can I survive on my own.

So with that said, I do have one space available for the Perfect Student. That is where you can come out to Tucson and you can work with me hand in hand and I will work with you and I will show you how to set it up a Private practice, how to grow it, how to scale it, whatever you need to know I will show you all the billing secrets, all the things that we do in our Clinic to get paid. Anybody can bill, billing is the easiest thing in the world but it’s how you get that money it’s called AR. That’s when you get the money and follow up after you bill. Again anybody can bill but it’s the follow-up that makes the money so we will teach you AR, we will teach you how to schedule it, how to collect it how to increase your referrals, all the forms all the systems that we have in our clinic I will show you how to do that.

Now in order to do that it’s a lot of information. Part of the perfect student is where you come in to Tucson and you fly out, we meet, I will show you the clinic, introduce you to the staff, the billing, the referral clerks, all that you get to meet everybody and we work hand in hand. But also that includes weekly Skype calls, you will have direct access to me, my personal cell phone, so it’s like having a team member to help you grow and scale your own Private practice. So if that’s something you are interested in and again I would have paid a lot of money starting out for that. It’s not going to cost a ton of money but it does cost because this is not free the podcast is free. And podcast is something that will get you motivated and get inspired so you can make those decisions and grow and start that Private practice. But this is not free, this is working with me one on one there is a cost but if that’s something that interests you, please go to www.privateslp.com/coaching and once click on that and you will see there’s a Speech therapy private practice coaching section and to be considered for the Private practice coaching, I need you to answer some questions – enter your email, give me your phone number, and again nobody is going to see this. This goes directly to me. This even bypasses my assistant she is not going to see this, this goes to my inbox and there is a series of questions there and I need you to answer those questions for me as honestly as you can so it will help me help you better. That way we can all make a good decision to see if this is a good fit so if that’s something that you would like to do, go ahead www.privateslp.com/coaching.

Today I wanted to talk a little bit about Cash flow, which is a very important aspect of the business. Before I do start, I want to tell you something I just got back from Australia I’m still kind of suffering from Jet lag, for those of you who do listen to the Podcast regularly you will know that I go to Australia on a yearly basis. I have a group of people that I meet there every year, I am a member of a closed internet community in Australia and it’s just a group of like-minded people you know we talked about internet marketing and just all kinds of neat stuff. But I went into Australia I arrived on a Tuesday and then I left this past Sunday and got home on a Sunday. It’s a 15-hour trip from Tucson to LA, LA to Australia and then back; it’s crazy. I used to live in New Zealand for about 4 or 5 years and I was a Speech pathologist there and I worked in one of the hospital systems there in the Northland District Health Board so I am kind of used to the plane ride but the older I get I am just realizing that I can’t handle that jet lag like I used to. But it was a great trip, it was fun and I got to see all these guys and gals that I have seen on the closed form and it’s just you go for the content but you stay for the community and that’s what I really enjoyed about it.

I am noticing as I am getting older my hearing it is not as good as it used to be, my vision is definitely not as good as it used to be so I am sitting there and I had to get an Uber to go a couple places and well in Australia here they say “Uba” but I wanted to get an Uber and I wanted to tip the driver. I was excited and I got this $50 bill and I needed to change it, so I ran out of the Uber and I am going into the hotel, and there was these two big glass doors you know the first one opens up kind of like Star Trek right and then you go through the next door and it opens up like Star Trek and you are in the hotel lobby, you take a right and you can get some change their at the bar. And I was a little bit too excited you know I guess I went through the first door and didn’t go through the second door. I took a quick right and I walk right into a pane of glass and I busted my head. The lady at the bar there she said, “Sir you’re bleeding” and I am like, “Oh my goodness it was really embarrassing, there’s nothing worse than walking into a glass wall. It was a beautiful glass wall, I couldn’t see it and BOOM I walked right into it, ended up in the Manly emergency room. It was great; it was a wonderful experience. If you want have stitches that’s the place to go Manly hospital. The lady who checked me in she was just absolutely lovely. She was the nicest lady in the world I think she was from England and she said, “Oh, I’ve got friends from New Orleans”, you know all this good stuff. And guess how much the emergency room bill was with no insurance, no overseas insurance just take guess. Nope, it’s not $2500, it’s not $2,000, it wasn’t even $1500, it wasn’t even 799 bucks, it was a $135 Australian dollar that’s cheap so 45 minutes I was out of there, I got stitched up and I’ve got this nice big bandage on my forehead and I’m good to go. I’ve got to go on television next week for our local segment of the Morning Blend here in Tucson, so I am going to have to do a little bit of work cover that up but it’s life and life is life. I just wanted you to know about that that was interesting.

Let’s talk about cash flow today. What is cash flow? That’s the amount of money you need in your bank to survive. Basically cash flow is the money moving in and out of your business and what’s left over after your expenses is called Profit. But let’s say your expenses exceeds your monthly reimbursements, that’s a loss and if the business can’t meet the needs of your monthly expenses then your Private practice you’ll have to use reserves to cover those expenses. So if you’ve got some cash in hand you can use that but if you don’t have cash in hand you’ve got to borrow the money from the bank, so are you working for yourself or are you working for the bank? If you are borrowing the money so that’s the big question but cash flow is so very important.

What makes a business cash flow positive? I’ve got apartments too I’ve got six apartments here in Tucson. I used to have a couple of duplexes right there by Tulane University in New Orleans when I lived there before hurricane Katrina. I was so lucky so blessed to have cash flow positive properties. Now to break it down let’s just keep it really simple. I was living upstairs and I was renting the downstairs, the monthly mortgage was 1200 bucks at that time. This was in 2000, which was a really good mortgage. I was living upstairs for free and renting downstairs for 1600 bucks. My note was 1200 so that’s a profit every month, so I was living for free and making a little something. So then I was able to buy a second apartment, a second duplex and then I was renting those two plus the bottom and then cash flow positive there. So it’s great until hurricane Katrina happens right and then you are like what do I do now. Well I was lucky I had ten thousand bucks saved up. So after the storm I was able to hire a contractor to come out. I didn’t have to worry about insurance I didn’t have to file a claim with Travelers Insurance.

Everybody had blue roofs trapped over their homes, but the day after I was able to get back into the city a little bit earlier than other people because I had connections. I had connections with the Army and they were able to get me in. Everybody’s got these blue roofs tarps over their roof to keep water from getting in their roof and to their home. And I was able to call one of my contractors, I said, “Hey, can you get me two roofs on my house?” and he said, “Yeah, I can do that.” and I said, “I got cash. How much?” and he says, “For you yeah let’s do that.” I was able to get two roofs on my own house for 8 grand. So that’s $4000 roof, that was cheap but the real reason was I had cash in the Bank. I could just reach in the bank, write a check, paid the guy and before it in two days I had two roofs. I didn’t have to worry about it. I didn’t have to go hack over the insurance companies; wait for checks so I can pay the contractor, nope I did all that later.

So the moral of the story is you’ve got to have cash in the bank to operate and because when you come across a deal you are going to get a significant discount you can purchase what you need to purchase at a discount because you’ve got the cash to do it. It’s the same with the business; it’s the same with your Speech therapy Private practice. You want to have cash in the bank. So that means when you get paid from insurance companies when you get paid from your contracts that you serve you want to make sure that you hold onto that money and don’t spend it. Because you are going to need that money to use on employees, you are going to need that money to pay your taxes. If you listen to the other podcasts especially the one about taxes, at the end of the year you get these 1099s from these insurance companies when they pay you out. They keep track of all that and at the end of the year they send you a little form and it’s your job to take that form and give it to your CPA or file it with your taxes because when the government come knocking they want their money and you are going to have to have cash on hand or you can borrow it but then again who you are working for yourself or the Bank?

And don’t forget when it comes to cash flow how are you going to increase it, now you can go out and knock on doors and talk to doctors’ offices and have contracts but you want to be careful like I was saying in Episode 23, if you bring an employee on there is cost for that. There’s a payroll cost there’s insurance cost like professional and general liability. And then the time it takes to get reimbursed from the third party and when we talk about third party payers we’re talking about private insurances like Blue Cross, Blue Shield, Aetna, Humana things like that. It takes a while it’s not like you see the kids today and you get paid tomorrow. You might not see that money for 60, 90 or 120 days out. AR that’s why that’s important, you want to make sure you get paid so you can increase your cash flow to get the money in to survive.

Just because you hire a bunch of employees doesn’t mean you’re going to make that much more money, you just have that much more expenses that is guaranteed. So you want to be again very careful and increase your cash flow, increase your growth slowly. The first CPA I talk to years ago she said you want to grow your business about %10 to %15 to %20 every year that way you can manage it, and you want to be very careful it’s like a chess game. So when I hear about people who want to rush into private practice and they want to quit their jobs. They want to leave their job without having cash reserve; you want to be very cautious. It’s like a chess game don’t go out and quit your job and you think when you’re just going to hang that shingle up and it says Speech therapy private practice, People are just going to roll in, and even if they do how are you going to get paid? You want to make sure you got all your bases covered. Now if you are taking insurances you want to make sure you get credential you want to have your billing in place, you want to have your referrals in place, before you even get started.

Also too remember I was telling you about New Orleans and having apartments and rentals and being cash flow positive. Everything is great until something happens like a natural disaster. I mean life is good until a hurricane wipes your city out in the floods. Then you have no job I didn’t have my job. I remember the place that I was working at they took the money back. They paid me via direct deposit they credited my account and then for some reason I can’t really remember they took it back. Here I am thinking what’s that about I got to have this money to survive. I got a family to feed and here I am it’s a long story. But the reason I am telling you this is because government regulations can change just like a hurricane or a natural disaster can affect the area that you are living in. what about when government regulation change. Look at the changes and MedicAid rates back in 2016 in Texas. Talk to those providers and see how they did when the bottom fell out when they’re reimbursement rates dropped you know 50%.

So what do you do when that happens when government regulations change, you have immediate rate reductions? How does that affect your business? You want to run lean you want to be frugal you want to save you want to work for yourself and not the bank. Cash flow is the way to do that you want to have a good positive cash flow in your business. I hope this is been a good episode trying to bringing it in from many areas and kind of give you examples about cash flow get your brain thinking. But if you have other questions about cash flow all you have to do is go to www.privateslp.com/contact you can reach me there or you can simply leave a comment below on my website there. Each podcast has its own post and at the bottom of the post there is a place for comment. Go ahead and leave a comment, again my assistant she doesn’t read those either those come straight to me so I will be more than happy to answer that too.

Also if you’re finding these podcasts valuable please go to iTunes and rate us a five star so other people can find this information easier can get the same value. And again value is what you get in the absence of money, so these podcast are free for you. I hope you guys have enjoyed this episode and as always if you have any questions about Speech therapy private practice, reach out to me and as always, Thank you for listening.


  1. Marla says

    Hello! My name is Marla and I am in Baton Rouge, LA. I am a bilingual SLP and just starting my private practice. I have enrolled in Early Steps and have been approved to accept Healthy Blue-Medicaid. My business will offer ABA, PT, OT and ST Services however I am only starting out with ST services and myself. I plan to accept private pay first for all therapies and medicaid for Speech, which I’ve been approved for. I am going to do the home health aspect until then open a small office in May.
    I am needing assistance understanding joining an insurance company as an individual provider and then adding my business. Also, how to add/hire employees to be able to bill for their services. How do I bill insurance companies? I have a ‘mentor’ that Healthy Blue has assigned me however how do you do your business? Which is better with hiring employees, 1099 or W2?

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