At Peak Strategies, we review an enormous volume of pharmacy financial data—whether through our bookkeeping and compliance work or the many pharmacy valuations we conduct annually. One theme appears time and time again: cashflow. Cashflow is king. It is the lifeblood of your pharmacy, and it must sit at the top of your financial priorities.
Yet what we repeatedly see is the slow creep of cashflow tightening.
In community pharmacy, cashflow issues rarely erupt overnight. They typically build quietly and gradually. A business can look “fine” for months, until suddenly it’s a scramble to meet supplier payments on the 24th or the 30th. Owners are juggling patient concerns, staffing pressures, stock shortages and day-to-day disruptions—so it’s no surprise that subtle financial shifts can go unnoticed. Most of the time, it’s an accumulation of small, easy-to-miss factors that eventually create significant strain.
Here are some of the most common contributors we see:
Stock levels creeping up over months without being noticed.
Retail and dispensary sales slipping, slowly but consistently.
Wages increasing while sales fall, especially with the sharp rise in pharmacist wages in recent years.
Gradual rent escalations putting pressure on margins.
Large script owing balances, particularly for pharmacies servicing nursing homes.
Misleading cashflow spikes caused by the timing of High Cost Drugs.
Owners maintaining the same personal drawings even as profit and cashflow decline.
Across the life of a pharmacy, many issues will naturally erode cash reserves. The real danger arises when owners don’t react quickly enough. You might have sophisticated financial systems in place, but without timely analysis and decisive action, their value is lost. Many owners simply get consumed by the pace of pharmacy life and overlook the early warning signs—this is more common than you may think.
If you’ve recently found yourself suddenly aware of a cashflow squeeze, the path forward is grounded in a simple truth: pay close attention to your inflows and outflows. Nothing groundbreaking, but incredibly effective when done consistently. Cashflow only becomes a problem when attention drifts away from it.
Here are practical steps to regain control:
Ensure your financial reporting is accurate and timely clarity is your greatest asset.
Seek the insight of a pharmacy-specialist accountant who can benchmark your performance against industry trends.
Act promptly on professional advice, implement systems, and allow time for financial improvements to show.
Focus on gross profit dollars, not just percentages; closely examine departmental performance, stock turns, and dead stock.
Review your staffing structure and set wage and hour budgets without compromising patient care.
Know exactly how much stock is on your shelves—unexpected blowouts here are extremely common.
Maintain realistic stock levels, working closely with your buyer to secure appropriate volumes at the right prices.
Work with your accountant to prepare profitability budgets and cashflow forecasts for the next 12 months.
Use these forecasts proactively cut unnecessary costs and plan ahead for any cashflow shortages.
Remember: cost-cutting alone won’t fix everything. Many expenses are fixed, so sustainable improvement requires growth in scripts and customer numbers. Invest in marketing, patient experience, and basket-size optimisation.
Adjust owner drawings in line with performance—business ownership is dynamic, and compensation should reflect that reality.
Doing nothing is the worst decision. Act quickly, stay calm, and remain patient, real turnarounds can take several months. And be wary of relying on overdrafts; they are a short-term patch, not a solution.
Turning your pharmacy into a cashflow-positive business isn’t always easy, but it is absolutely achievable, and you don’t have to work it out on your own. If you’re starting to feel the pinch or you’re worried about where your cashflow is heading, reach out to our team at Peak Strategies. We work with pharmacies across Australia every day and can help you regain clarity, rebuild control, and put your business back on a stronger financial path. Let’s tackle it together before the pressure escalates.