As a pharmacy owner, you are always looking for ways to do things better – deliver better service for customers, smooth out pharmacy processes and ultimately grow your business.

However, if your background is as a healthcare professional, the financial side of running a pharmacy may be something that you came to later in your professional journey.

At RA Accountants we are experts in helping pharmacists at every stage of their journey. We help pharmacists make the right business decisions from starting up their first pharmacy, to growing to multiple sites, all the way to eventual succession planning.

For pharmacy owners, our pharmacy accountancy experts have pulled together a list of 8 tips from our accountancy perspective to help you maximise your pharmacy revenue.

1. Ensure You Have Efficient Revenue Management Processes

Cash flow and revenue management need to be central to the running of your pharmacy operations.

Revenue management can be improved by optimising billing and collection processes to ensure timely payments from NHS BSA and private patients. As well as implementing automated billing systems to reduce errors.

A second key factor is in maximising your dispensing capacity. Every prescription not dispensed is revenue lost for the business. So, use efficient workflow systems and consider extended opening hours where demand justifies it to keep your dispensing volumes optimised.

Monitor your NHS contract performance closely. Late submissions or compliance issues can result in reduced payments, directly impacting your revenue stream.

2. Keep Control of Your Costs

As a pharmacy owner it is important to regularly review operational costs, including medicines procurement, equipment maintenance, and staffing. Identify areas where costs can be reduced without compromising quality of care.

This could be by reviewing suppliers for medicines and sundries, joining buying groups for better wholesale prices, or outsourcing resource intensive tasks like bookkeeping to an external provider.

Pay particular attention to your medicine procurement strategy. Generic substitution where clinically appropriate can significantly improve your profit margins, and building relationships with multiple wholesalers ensures competitive pricing.

3. Use Cloud Accounting

This software will give you real-time access to your financial data, meaning you always know exactly what your financial position is.

You can think of cloud accounting a bit like internet banking. Rather than having all your accounting information saved on your computer, it is stored online instead. This means you can access it from any device, anywhere and anytime you like.

This can make it an important tool in your arsenal for managing your pharmacy revenue and controlling your costs. It’s particularly valuable for tracking your different revenue streams – NHS dispensing, private prescriptions, over-the-counter sales, and clinical services.

Common cloud accounting software is provided by companies such as Xero.

Top tip: If you need help implementing Xero cloud accounting software – please get in touch. We are a Xero Platinum Partner, the top level of the Xero accreditation scheme, meaning we can help you get the most out of the Xero software platform.

4. Create a Strategic Pricing Plan

Analyse your fee structure for private services to ensure it is competitive and profitable.

Consider what your local competitors are offering and what they are charging for services like private prescriptions, travel health consultations, and clinical services. Ideally, you don’t want to compete on price, but by offering greater value to your customers in other ways.

This could be the types of service you offer, the quality of your service, or even how customers interact with your business. For example, is it easy to book a consultation, are your staff knowledgeable and friendly, and is the pharmacy a welcoming place to visit.

When you deliver greater value to your customers, you can command higher pricing for your private services while your NHS dispensing remains at contracted rates.

5. Maximise Your Tax Efficiency

A good business structure can be the key to making your pharmacy tax efficient.

However, this can be complicated to work out and will depend on your individual circumstances, as well as your long-term goals. We therefore recommend you work with an experienced tax professional to ensure you are using the most efficient tax structure for your business.

A specialist pharmacy tax expert will also help you take advantage of all available tax deductions and credits, as well as stay updated on tax regulations specific to healthcare and retail businesses.

Consider the timing of equipment purchases and stock holdings to optimise your tax position, and ensure you’re claiming all allowable expenses related to professional development and regulatory requirements.

6. Diversify Revenue Streams

As a pharmacy professional your time is both valuable and finite, therefore increasing the average revenue you are able to generate per customer interaction can be a great way to increase your business revenue and grow your pharmacy.

You could do this by offering additional higher value services such as:

• Clinical services: Blood pressure monitoring, cholesterol testing, diabetes screening
• Vaccination programmes: Flu vaccines, travel health, COVID-19 boosters
• Specialist consultations: Smoking cessation, weight management, contraceptive services
• Medicine reviews: Comprehensive medication reviews and adherence support
• Retail expansion: Health and beauty products, mobility aids, wellness products

The other benefit of offering these additional services alongside increased revenue, is developing a reputation in these areas can be a fantastic way to attract new customers.

Alternatively, think about other revenue streams you could explore. This could be around partnerships with local care homes, offering medication delivery services, or developing corporate wellness programmes for local businesses.

Top tip: When considering diversifying services (e.g., offering private health consultations, travel health services, etc.), it’s essential to seek professional advice.

One key area to consider is that many private health services are subject to VAT. Many pharmacies expand into private healthcare services, but it’s important to note that services like travel health consultations and some clinical services may be subject to VAT. Understanding VAT registration requirements, invoicing, and compliance with HMRC will help you avoid potential pitfalls.

7. Financial Planning and Forecasting

An important element of growing your business is having a plan. When it comes to your finances this is just as true.

Taking the time to develop a comprehensive financial plan that includes budgeting, forecasting, and setting financial goals is one of the most important steps you can take to ensuring the success of your pharmacy.

Your financial planning should account for the unique aspects of pharmacy business, including:

• Seasonal variations in prescription volumes and over-the-counter sales
• NHS contract changes and their impact on dispensing fees
• Regulatory compliance costs and professional development requirements
• Stock holding requirements and working capital needs

Once you have your plan in place, avoid the temptation to let it collect dust on the shelf. Instead, regularly review your financial performance against your planned goals to make sure you are making informed business decisions.

8. Let Your Team ‘Own’ Parts of Your Budget

It is often said, no one looks after a business’s money quite like the owner. However, with your responsibilities pulling you this way and that, it can be hard to keep tabs on all parts of your business’s finances.

This is where giving responsibility for parts of your budget to an individual member of your team can be a great way to control costs. With ownership and responsibility for their part of the budget – they can give more attention than you would otherwise be able to do managing the whole budget yourself.

Consider assigning budget responsibility for:

• Medicines procurement to your most experienced dispenser
• Over-the-counter stock management to your retail-focused team members
• Clinical services to qualified healthcare assistants or technicians

A second set of eyes can also be a great way to spot opportunities and potential issues you might not have picked up on.

RA Accountants are specialists in offering accountancy services for pharmacy professionals. We offer a complimentary, initial online consultation to discuss your personal circumstances and to see how we can help. Get in touch to book your appointment today.

This article is for guidance only and professional advice should be obtained before acting on any information contained in them.

No responsibility can be accepted for loss occasioned howsoever to any person as a result of action taken or refrained from as a result of reading.