20/20 Money Episode # 88 – How to Understand Practice Cash Flow to Help Grow Your Net Worth with Nathan Hayes

Hello, and welcome to this episode of 20/20 Money! My guest on today’s show is Nathan Hayes. Nathan is an experienced practice management consultant at IDOC with a specialization in helping ODs understand and make decisions based on their practice financials. I love working with people like Nathan because, frankly, it’s a smooth transition to where his expertise and my expertise meet, and I believe this conversation will demonstrate that synergy. During our discussion, we discuss the cash reserve needs of practices post-COVID, the four buckets that need to get paid when you take money out of your practice, how to think about how much you should pay yourself, why skimping on how much you pay yourself in W2 wage might actually be hurting you in the long run, why he’s a fan of getting money out of the practice but cautions about what to look out for if you’re operating on the “Profit First” system of cash flow (which was covered in last week’s episode), and why sitting on excess cash in your business can actually hurt the value of your business.

Our conversation then ties into how managing cash flow in the practice transitions into using that cash flow to accumulate and grow your net worth, the importance of not banking on extracting max value from your practice to fund your retirement, the 5 D’s of why a practice owner could be forced to sell, and how solo owners can and should be looking at a buy-sell agreement with another owner in their town as a contingency planning strategy to ensure that all is not lost in their practice if they’re forced to sell early.

In financial planning, we often hear the phrase “cash is king” and the variation on the theme with this episode is that cash (flow) is king. Nathan shares his combination of passion and experience in this conversation and it’s an episode that I’m confident will give every listener at least one nugget of information that they can use to evaluate their cash flow model and distribution out of their practice.

As a reminder, you can get all the information discussed in today’s conversation by visiting our website at integratedpwm.com and clicking on the Learning Center. While there, you can check out any number of additional free resources like our eBooks and on-demand webinars or you can also set up a 20-30min Discovery conversation to learn a little bit more about how our planning process helps ODs around the country reduce taxes, grow their net worth, and manage their cash flow effectively.

And with that introduction, I hope you enjoy my conversation with Nathan Hayes.

Simple Numbers, Straight Talk, Big Profits by Greg Crabtree