Your pharmacy relies heavily on the intake of cash to survive. So, when you have a week where payroll, drug costs, and reimbursements don’t quite align, it leaves you wondering why the numbers don’t add up like they should.
Cash flow can make or break your pharmacy. It doesn’t matter if you have strong prescription volume, loyal patients, and rising sales. If money isn’t moving through your business efficiently, your profitability suffers. You may not realize it, but small leaks can easily drain your cash reserves. However, once you figure out the source of the leaks, you’ll be able to restore financial stability.
Taking charge of cash flow doesn’t have to be a guessing game. By taking control over your finances and setting your pharmacy up for success, your stress will be a thing of the past.
Late Reimbursements
Slow and shrinking reimbursements are one of the biggest thieves when it comes to cash flow. Your cash flow can feel like it’s constantly one step behind due to lower dispensing fees and delayed payments from pharmacy benefit managers (PBMs). Your working capital suffers when claims are underpaid or take weeks to process.
Always review your reimbursement reports carefully. This is where your pharmacy management system or reconciliation service comes into play to flag underpaid claims quickly. Also, make sure your team is resolving claim rejections daily so you’re not losing time waiting on fixes.
Cluttered Shelves
It’s not uncommon for independent pharmacies like yours to stock more than is needed. This often happens when wholesalers push volume-based discounts. Every extra bottle that sits on your shelves is tying up dollars that could be working elsewhere in your pharmacy.
A good benchmark is 12 inventory turns per year. In other words, you sell through your stock roughly once a month. Audit your slow movers quarterly and send back dead stock when possible. You might even consider a perpetual inventory system or perhaps working with a third-party inventory specialist. They can help find your ideal balance.
Rising DIR and Transaction Fees
Direct and Indirect Remuneration (DIR) fees, along with credit card processing costs, can silently chip away at your bottom line. As margins tighten, even a few percentage points off each transaction can add up over time.
You can review your processor contracts and find out whether you can switch to a flat-rate or membership-based pricing model to lessen swipe fees. Make sure you understand when and how DIR fees are being assessed. Partner up with your buying group or PSAO. They can help you negotiate better rates or at least let you know when fees will hit.
Escalating Labor Costs
While staffing is essential, it’s payroll that can easily become one of your largest expenses. Your scheduling needs to be aligned with actual workflow because if overtime becomes routine, labor costs can ruin profits.
Review your staffing patterns versus prescription volume. Look for opportunities to cross-train employees so coverage is more flexible. If you automate routine tasks, like refill reminders and inventory counts, you can also free up hours without cutting service.
Disorganized Billing and Collections
Do you provide clinical services, durable medical equipment (DME), or point-of-care testing? If so, incomplete or inaccurate billing can slow payments and create cash shortfalls. And as you know, the longer it takes to collect, the more pressure it puts on your working capital.
Front-End Strategy is Neglected
Front-end sales might only make up a small percentage of income, but they can be an important source of immediate cash flow. Don’t neglect your front-end strategy or you may miss out on easy opportunities for profit.
Improving Financial Clarity
When it comes to cash flow challenges, you can’t manage what you can’t see. If your financial data is scattered across multiple systems, or if you only review it quarterly, it’s easy to miss problems until they’re critical.
Set up a monthly financial review. Look at gross profit, inventory value, payroll, and upcoming reimbursements. Use dashboards or accounting software to visualize trends. This is all about spotting early warning signs and making proactive adjustments.
It’s easy for cash flow management to fall behind everything else during the daily chaos. However, with tighter reimbursement models and increased operational costs, strong cash management is essential.
When you address the most common drains, you can steady your financial foundation and free up cash for what truly matters: patient care, growth, and the future of your pharmacy.
More articles from the December 2025 issue:
- Your Pharmacy Goals for 2026
- PBA Health + Speed Script = Partnership
- From Scripts to Support
- From Retail to Clinical
- A Safe Space
- Beyond the Counter
- The Rise of Menopause Clinics
- Where Your Cash Goes
A Member-Owned Company Serving Independent Pharmacies
PBA Health is dedicated to helping independent pharmacies reach their full potential on the buy-side of their business. Founded and run by pharmacists, PBA Health serves independent pharmacies with group purchasing services, wholesaler contract negotiations, proprietary purchasing tools, and more.
An HDA member, PBA Health operates its own NABP-accredited warehouse with more than 6,000 SKUs, including brands, generics, narcotics CII-CV, cold-storage products, and over-the-counter (OTC) products — offering the lowest prices in the secondary market.
