For a stronger dental practice you need to make sure you are looking at the past, present and future. Having a 13-week rolling cash flow budget gives you a comprehensive analysis of your practice’s overall financial well-being.
An effective cash flow is rooted in your practice’s historical trends and considers current initiatives and any internal and external factors that may impact the financial security of your business – including past, present and future billing and payment patterns. In order to dig a little further to gain a little more insight into your company, I recommend:
- Analyzing your accounts receivable to determine ways to quickly turn them in to cash.
- Reviewing your current inventory levels to determine what is old or obsolete and what can be used to generate more revenue.
- Going over your accounts payable to optimize your own financial obligations.
- Looking at your non-core assets to determine how much money is being spent and whether or not a more lucrative avenue is available.
You can’t set it and forget it though. Make sure you are updating your cash flow regularly. A cash flow dashboard involves extra work in the beginning, but you’ll thank yourself later. If done correctly, you will have the ability to accurately estimate your business’s variable costs and expected sales at a moment’s notice – and that is a very powerful tool to have.