Episode 335 | The Profit Answer Man | Craig Dacy
Insurance Pays You 90 Days Late. Here’s What That’s Actually Costing You.
You billed more this month than you ever have. You are still moving money around to make payroll on Friday. Nothing about your business looks broken from the outside, and yet you are lying awake doing math that should not be this hard for someone who is objectively doing well. If that sounds familiar, you are not bad at running your business. You are missing one piece of infrastructure that almost nobody tells owners they need, and it has nothing to do with working harder, selling more, or finally getting around to hiring a better bookkeeper.
The Gap Nobody Warns You About
Craig Dacy runs a financial coaching practice in Austin, Texas, and works almost exclusively with physical therapy practice owners, a business type where over 90 percent of revenue comes through insurance. Here is the part that applies to you even if you have never billed an insurance company in your life. When a PT treats a patient, they get paid for that visit 60 to 90 days later. In the meantime, they are paying the therapist who did the treatment, often $35 to $40 an hour, against a reimbursement that might land around $100, weeks or months from now. The work is done. The team is paid. The money for that work has not arrived yet, and sometimes it never does, because insurance companies deny claims after the fact, leaving the business having already paid staff to earn nothing.
If you invoice net-30, wait on retainage, or bill progress payments on a job before the final draw, you are living a version of this same gap. You are financing your own payroll out of pocket every single cycle, and most owners have never named it as the actual mechanism behind their cash stress. They just feel the stress two or three weeks after a slow patch, without connecting it back to work they did a month earlier, and assume something is wrong with the business itself rather than the timing of the money moving through it.
Why You Ended Up Here Anyway
Of course you built your pricing and your payroll around the wrong number. Nobody handed you a manual for this. Every accounting class, every QuickBooks tutorial, and every well-meaning advisor pointed you toward the books, the profit and loss statement, the tax return. Those documents tell you what already happened last month, sometimes later, since most owners’ books are not fully reconciled until well into the following month. They were never built to tell you whether you can make payroll this Friday. You did not build a broken system on purpose. You built the only system anyone showed you, and it was missing an entire layer that has nothing to do with taxes or compliance and everything to do with the day to day decision of whether you can afford to spend money right now. It was not the wrong instinct. It was an incomplete one, and the businesses that figure this out early tend to look nothing like the ones that figure it out only after a near-miss on payroll forces the question.
Your Bank Balance Is Lying to You
Most owners open a banking app, see one number, and decide whether things are good or bad based on that single figure. Craig’s point cuts right through that habit: a big pile of money in one account feels like safety, but a lot of that money is already spoken for. Payroll that has not run yet. A tax payment sitting three weeks out. Insurance reimbursements you are still waiting on that you already spent against. The fix is not a better spreadsheet or a more expensive version of QuickBooks. It is separating that one account into buckets so you can see, at a glance, what is actually yours to spend versus what is already claimed by something else. Once an owner does this, the fog does not get a little better. It disappears, and Craig has watched clients describe that shift as the single biggest relief of working with him, even before any of it produces a dollar of new profit.
Your Payroll Is Priced Against the Wrong Number
Here is the belief crack. Most owners price labor against the wage they write on the check: $35 an hour, a flat rate, a percentage split. That number is incomplete. It leaves out the loaded cost, benefits, paid time off, and the employer side of payroll taxes. Three years into a business, an owner adds benefits to stay competitive for hiring, forgets to adjust pricing to absorb it, and quietly starts losing money on every hour of labor they did not reprice.
There is a second version of this same mistake. Craig has watched owners move a team member from a percentage-of-collections model, where pay tracks directly with what the business actually collects, to a flat hourly or salaried rate, assuming it simplifies things. It does not. Utilization tends to drop once the pay is no longer tied to output. A therapist seeing 30 patients a week under a percentage model can quietly slide to 20 under salary, and the payroll math the owner built the whole pricing structure around collapses without a single number on paper changing. The fix is not paying people less, and it is not refusing to ever move someone to salary. It is knowing the real, fully loaded number before you set a price or change a pay structure, so growth does not become the thing that quietly bankrupts you.
The Number That Should Scare You Is Never Actually Zero
Craig’s practice uses a method he calls the new zero. Instead of running an account down toward an actual zero balance, you decide, in advance, what balance should trigger action. Maybe that number is $5,000. Maybe it is $10,000, depending on the size of the business. The moment an account dips below that line, you already know it is time to make a decision, before the account is empty and the decision is being made for you in a panic on a Thursday afternoon before payroll runs.
Paired with a float or insurance-hold account, built specifically to absorb a 60-to-90-day payment gap, this turns a business that reacts to cash emergencies into one that sees them coming weeks in advance. Craig calls the process behind funding that float temporary sacrifice: pay down debt first if it exists, trim a handful of expenses for a season, and slowly raise the new-zero baseline as revenue grows, instead of trying to fund three months of breathing room in a single move.
Cutting Expenses Only Goes So Far
Craig works with a seasonal irrigation company in Utah that used to generate zero revenue for three to four months every winter, when the water gets shut off entirely. Rather than treat that stretch as dead time to survive on savings, the owner started offering snow plowing and hanging Christmas lights during the exact months irrigation work disappeared, using the same crew and the same capacity that would otherwise sit idle. Nobody would think to look for an irrigation company doing snow removal. That was the point.
Most owners default to cutting expenses when cash gets tight, and Craig’s own Keep, Cut, Trim exercise (what has to stay, what can go entirely even temporarily, and what can be trimmed without losing the thing itself) is a real lever worth running. A software subscription tier downgraded from an unused higher plan can free up $30 or $50 a month, and across five or ten line items, that adds up to real breathing room. But expense cutting alone has a ceiling. The bigger lever, and the one most owners never think to pull, is asking what else the business is already capable of producing with the people, equipment, and capacity it already has sitting idle for part of the year.
Rocky’s Perspective
Here is what I see when I sit down with a business owner who is billing more than ever and still stressed every Friday. Their bookkeeper records the past. Their CPA files the past. Nobody is reading the story the numbers are telling before prescribing a fix, and that is the step I refuse to skip. I have watched businesses scale their revenue and completely fail to scale their profit or their cash. What scales instead, every single time, is the problem. More revenue running through the same broken structure just means a bigger, faster version of the same fire. The fix is never working harder. It is building the structure that was missing from day one, so the next dollar of revenue actually turns into cash you can see and spend on purpose, instead of disappearing into a gap nobody ever measured.
I have sat across from owners doing millions in revenue who still could not tell me, off the top of their head, whether they could afford to hire their next person. Not because they were careless, but because nobody had ever separated the question from the general fog of “there’s money in the account, probably.” That fog is the actual enemy. Not the insurance company, not a client’s slow-paying accounts payable department, not even the size of the gap itself. The fog of not measuring it.
The One Thing
If you do nothing else this week, open a new account and name it your float, or your buffer, or whatever you want to call it. Move enough into it to cover one full cycle of the gap between doing the work and getting paid for it, whether that gap is a 90-day insurance reimbursement, a net-30 invoice, or retainage held until a job closes out. You will not fix everything with one account. But you will stop finding out how bad the gap is on the day it actually hurts you, and that single shift changes every decision you make after it, from hiring to pricing to whether you finally pay yourself on a schedule instead of whenever there happens to be money left over.
You are not the worst boss you have ever had because you are careless. You are the worst boss you have ever had because nobody showed you where the money actually goes before it disappears. That is fixable, and it starts with one account and one honest number.
About Craig Dacy
Craig Dacy, owner of DACY Financial Coaching, has helped hundreds of small businesses, with a focus on Physical Therapists, find confidence and clarity in their finances. After spending over a decade as an educator, Craig combines his knack for small business and love for teaching to help make the overly complicated concept of business finances incredibly simple to understand.
Craig lives in Austin, TX with his wife and 2 kids. When he’s not spending time with his family, he can be found reliving “the good old days” as the lead singer and bass player for his 90s cover band, Zoodust.
Links
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Music provided by Junan from Junan Podcast
Any financial advice is for educational purposes only and you should consult with an expert for your specific needs.