Your Therapy Practice is Growing. Is Your Cash Flow? 3 Financial Strategies for Practice Owners.

You did it. You’ve grown your practice from a solo venture into a thriving, multi-therapist team. You’re serving more of your community and making a bigger impact, and that is an incredible accomplishment.

But with that growth comes new challenges. The admin gets more complex, the stakes feel higher, and you’re no longer just a therapist—you’re a CEO. And one of the biggest challenges that can keep a successful practice owner up at night is cash flow.

You provide the services, you file the claims, and then… you wait. Waiting 30, 60, or even 90 days for insurance companies to pay can create a stressful boom-and-bust cycle that makes it hard to pay your team, your rent, and yourself with confidence.

The good news is that you don’t have to let unpredictable payment cycles control your business’s future. It’s time to move from a reactive to a proactive financial mindset. Here are three practical strategies to help you manage your growing practice’s finances with clarity and peace of mind.

Strategy 1: Become the Master of Your Cash Flow

Cash flow is the financial lifeblood of your practice. When it’s inconsistent, everything feels unstable. The key is to get ahead of it with proactive systems, not just reactive scrambling.

Create a Simple Cash Flow Forecast: A forecast is your financial road map. On a simple spreadsheet, project your income and expenses over the next 13 weeks. For example, you know payroll for your 5 therapists is $X on the 15th and 30th, and rent is $Y on the 1st. You can then map your average expected insurance reimbursements against those fixed dates to see where the gaps are. This simple tool moves you from guessing to knowing, allowing you to see a potential shortfall in December while it’s still September. If you are already using accounting software like Xero, you will be able to enter these projections and create reports from them.
Build a Financial Safety Net: In a business with lumpy revenue, a cash reserve is a necessity. Aim to have 2-3 months of operating expenses in a separate business savings account. This isn’t a sign of planning for failure; it’s a strategic tool that gives you the freedom to make decisions from a place of stability. It’s the buffer that lets you approve a new piece of equipment or cover payroll with confidence, even during a slow reimbursement month. Don’t be afraid if you can’t do this while you are still growing. It’s a big goal and a small practice might not yet have the funds.
Optimize Your Billing Cycle: Don’t just wait for money to come in, but actively work to shorten the time it takes.
- Submit Claims Daily: Don’t let claims pile up for a week. The sooner they’re in, the sooner they’re paid.
- Scrub Your Claims: Use a clearinghouse or practice management software to check for common errors before you submit. A typo can cause a denial that delays payment by weeks.
- Enforce Co-Pay Collection: Ensure you collects all co-pays and deductibles at the time of service. This is immediate, guaranteed cash flow you don’t have to chase.

Strategy 2: Intentionally Structure Your Team’s Payroll

As your team grows, the 1099 vs. W2 question becomes critical. This isn’t just a tax issue; it’s a strategic decision that defines your relationship with your clinicians and your legal obligations as an owner.

The Strategic Difference:
- 1099 Independent Contractors are essentially business owners you contract with. This offers you flexibility and lower overhead (no employer-side payroll taxes). The trade-off is a lack of control over how, when, and where they work.
- W2 Employees are a direct part of your organization. This allows for more integration into your practice’s culture and procedures, leading to a consistent client experience. It comes with higher costs (payroll taxes, workers’ compensation, etc.).
A Common Pitfall: Worker Misclassification: This is an area where a no-judgment approach is vital. It’s easy to make a mistake, but it’s important to be proactive. The IRS looks at three main categories to determine status: Behavioral Control (Do you dictate how they do their job?), Financial Control (Do you control the business aspects of their job, like how they are paid and if they can work elsewhere?), and the Relationship itself (Do you offer benefits? Is the work relationship permanent?). Misclassifying an employee as a contractor can lead to significant back taxes and penalties.
Questions to Ask Yourself:
- Do I require clinicians to attend mandatory staff meetings?
- Do I set their hours or caseload requirements?
- Do they have to use my specific EHR and billing systems?
- Am I their primary or only source of income? Answering “yes” to these questions suggests you are leaning into an employer-employee relationship, and a W2 classification may be more appropriate, but you have to look at the whole picture to really make the determination.

Strategy 3: Look Beyond Revenue to True Profitability

A growing practice means growing revenue, but that doesn’t automatically mean growing profits. To truly optimize, you need to understand the story behind your numbers.

Track These Key Performance Indicators (KPIs):
- Profit Margin: What percentage of your revenue is actual profit after all expenses are paid? This is the ultimate measure of your practice’s financial health.
- Revenue per Clinician: This helps you understand who is driving revenue and allows for fair compensation models and informed hiring decisions. This is where I recommend using a system like Xero instead of QBO because at all levels of the subscription you can track categories.
- Average Reimbursement Rate per Insurer: Are you averaging $95 per session from one insurer but only $75 from another? Tracking this data gives you tangible proof of which contracts are most valuable and which might be worth renegotiating or even terminating.
Putting Your Numbers to Work: Data is useless without action. If you notice your profit margin dipped last quarter, you can dig into your expenses to see why. If you realize one insurance panel is consistently slow to pay and reimburses at a lower rate, you now have the data to make a strategic decision about your relationship with them. This is how you move from just running your practice to truly leading it.

Your Next Step to Financial Clarity

Managing your group practice’s finances isn’t about becoming a math expert overnight. It’s about gaining the clarity and confidence to lead your business forward, so you can focus on what you do best: providing incredible care to your community.

Feeling like you’re navigating these challenges alone? It doesn’t have to be that way. If you’d like a no-judgment partner to help you get clarity on your practice’s finances, let’s chat.

Schedule a complimentary consultation today, and let’s build a financial plan that supports your practice’s vision and gives you peace of mind.

Disclaimer: This guide provides general information about the Child Tax Credit for tax year 2025. Tax laws can be complex, and individual situations may vary. For personalized advice, consult with a qualified tax professional or CPA.