Magazine article Drug Topics

Behind the Eight Ball? Here Are Some Tips for Survival

Magazine article Drug Topics

Behind the Eight Ball? Here Are Some Tips for Survival

Article excerpt

With the tight margins pharmacies face these days, many businesses can go under very quickly if a third party doesn't pay up. If your pharmacy is over a barrel, what can you do to survive?

Pharmacists attending a recent legal seminar sponsored by the Arnold & Marie Schwartz College of Pharmacy & Health Sciences received some timely advice on this sobering subject from two attorneys. The seminar was held in New York City.

The suggestions William Hirschberg, Esq., who heads up a New York law firm of the same name, gave to the audience can be boiled down to the following:

Make sure you have an attorney who knows your business well.

Don't sign anything without having your attorney review it first.

Know what your business, inventory, and accounts receivable are worth.

Plan ahead for a rainy day; don't wait until a hurricane hits you before you take action.

When pharmacists are in financial straits, Hirschberg said, they should not call their suppliers to make arrangements to pay them back. Instead, they should ask their lawyer to negotiate with the creditors for some leniency regarding payments. And pharmacists should never sign personal guarantees for leases or inventory unless their lawyer has approved it.

If you have given a personal guarantee to a supplier and you owe him money, you're on the hook forever, Hirschberg warned. He added that creditors who don't hold a personal guarantee are often more willing to work things out than a creditor who has a signed guarantee in hand.

In terms of planning ahead, he continued, if you have a partner, make sure you have an agreement with that person for an orderly buyout. Without it, you may find yourself involved in a fight down the line and forced to take your case to court.

In the same vein of planning ahead, the attorney urged pharmacists to develop a relationship with a backup supplier. If you are more than 90 days past due on your payment to your wholesaler, he said, that supplier may threaten to cut you ott, ana you must then scramble to find another source for your products. Having a secondary supplier would alleviate this problem.

Even if you're hard up, "don't go C.O.D." with your vendors, because it can be a "slow drain on your cash flow," Hirschberg declared. Go through your inventory and eliminate products that don't move from your shelves, he said. Make a deal with your suppliers; send the slow-moving products back and get a credit for them toward future purchases. …

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