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Sales Projections

When the estimated 50 units of the Automated Billing System are sold, gross profit is $300,000 after 50 percent of the system’s selling price is given to the marketing company. The System Setup and System Support sales profits are not shared with the marketing company. By selling 50 Automated Billing System units along with system setup and system support sales, the projected gross profit for 2008 is over $11 million.

Staffing Budget

The Automated Biller staff is composed of 18 employees; 3 top executives, 5 customer service reps, 4 system support and trainers, and 6 IT technicians. In the future, depending on the success of the Automated Biller’s first years sales projections, technical consultants will be called in to improve the current technology.

The largest segment of the staffing budget is the IT technical staff. Total payroll costs totals over $6 million, representing over half of the company’s first year gross profits.

Capital Investment and Loans

The Automated Billing System Company is expecting an investment in November 2007 of $700,000 from NIR Group. This amount will complete some of the R&D needed to mass market the system and will be used to search for a nationwide marketing company.

Income Statement

Although the net monthly sales are over $15 million, the 50 percent commission expense for the marketing company reduces gross profit below $600,000. This results in a monthly net profit of $255,000 by December 2008. Total net profit for 2008 is $2.6 million.

Additional sales are added to meet the needs of the specific medical practice. These goods and services are usually sold at cost, and will not be included in the 50 percent marketing company commission. These products for sale include additional software licenses, hardware needs, and scanning forms.

This income statement does not include sale auxiliary modules. For example, different medical specialties have to purchase a module that is specifically suited to their practice. Prices for these modules are shown in the table below; sales of these modules are subject to the 50 percent marketing company commission.

Specialty	Cost
General Surgery	$9,990
Anesthesia	$7,990
Cardiology	$2,990
Pain Management	$9,990
Ambulatory Surgery Center	$29,990
Gynecology	$7,990
Orthopedics	$9,990
Radiology	$7,990
Hospital Billing	$49,990
Additional Locations	$4,990
Additional Work Station	$2,990

Statement of Cash Flows

Since the financial statements show the initial product launching, the $700,000 NIR Group due November 2007 and the $850,000 loan from CEO Chandana Basu are included in the January 2008 “Income from financing” section of the Cash Flows statement. The Automated Biller System is in need of another $1.5 million by February 2008 to continue the year’s projected performance. This additional installment will be used to develop streamline support and training materials to bring the Automated Biller onto the mainstream medical billing market.

Balance Sheet

The balance sheet is broken down into the four quarters of 2008. The current ratio average for the first year is 6 which indicates that the Automated Biller System has limited current liabilities in relation to current assets; this can be attributed to the Company’s mission to seek investor financing as opposed to conventional loans. The high quick ratio results from the same goal.

Conclusion

The Automated Biller creates an incredible opportunity for both the medical practice and the financial investor. Although the medical industry displays a high demand for HIPAA compliant medical billing software, the Automated Biller is the only one that can offer not only HIPAA compliance, but can assist in managing the entire healthcare practice. Because this product fills a niche in the market, with proper marketing and promotion strategies, sales are expected to soar. For the venture capitalist, the long term financial gains are very high, but now is the time to invest. As more companies become abreast of the demands of the medical billing industry for HIPAA compliant practice management software, the sales potential will slow; hopefully by that time, the Automated Biller will have already taken a large share of the market. The largest expense for this product is to complete the Automated Biller and have it ready for mass marketing.

Works Cited

“Physicians and Surgeons.” US Bureau of Labor. Bls.gov. 28 October 2007. Retrieved from http://www.bls.gov/oco/pdf/ocos074.pdf