The net amount of cash transferred in and out of a business, is what cashflow represents at its core, and this can include sales revenue (cash inflow), and expenses like payroll, rent and payments to suppliers (cash outflows).
Cashflow that’s positive gives an indication that a business is generating more money than it’s spending, which can be put aside to be used in the future, or reinvested. Negative cashflow on the other hand, indicates that a business may need to make some adjustments to how it operates, or seek extra funding from somewhere to remain afloat.
Working with a service provider of tax planning in Coral Gables as a medical practitioner, can help you get to grips with your cashflow and profit, and better manage your cash overall.
But why is cashflow so important to a medical practice?
When the cash coming in, and going out of your medical practice is managed effectively, you’re better able to anticipate your needs financially, avoid incurring penalties for late payments, and make plans for the future investment of your money. When cashflow isn’t managed effectively, your medical practice might run out of cash, and be unable to pay its employees, or its suppliers.
Professional assistance from an industry-specific accounting firm can help you closely monitor the flow of cash in and out using modern tools for forecasting, and give you advice so that you’re always prepared should market conditions fluctuate. When you understand your cashflow and manage it effectively, you can also make decisions about inventory, hiring, expansion and marketing, that are more informed, and therefore, more likely to succeed.
Could a 13-week cashflow forecast benefit your medical practice?
Designed to help a business better project and manage its flow of cash over a period of three months (broken down by week), a 13-week cashflow forecast is a popular tool used for financial planning purposes. Providing a picture of liquidity that’s near-term, it allows businesses to be proactive with cashflow; anticipating and addressing shortages or surpluses before they become problematic for operations.
This approach offers businesses the foresight and agility they need to make daily operational decisions, unlike models that are annual or monthly, and can be of particular value during growth periods, or periods of change and uncertainty.
Always looking forward from the current date by 13 weeks, a rolling 13-week period is a window of time that’s continuously updated. The forecast is adjusted every week, providing businesses with a real-time and forward-facing view of their cash position. Favored by lenders and financial advisors alike, it’s able to give up-to-date and relevant data in a fast-paced business landscape.
Ultimately, the main aim of a 13-week rolling cashflow is to empower businesses when it comes to managing their cash; helping them avoid unexpected cash crunches, recognize opportunities for cash investments, and reassure both lenders and investors.
13-week cashflow forecast: ideal from a business perspective?
There are in fact, many different situations in which this type of forecast is especially useful, such as when a business is entering a new market, launching a new product or service, looking for funding, or planning for quick growth, among others.
With help from professional bookkeeping in Miami, you could learn more about this method of cashflow management, and determine whether short-term 13-week cashflow forecasting, or long-term 12-month forecasting is better suited to your medical practice.
The main advantage of a 13-week forecast is that its offers agility and relevance to business owners that’s immediate. In terms of managing crises, spurts in growth, or changing markets, this type of forecast can be indispensable in enabling you to quickly pivot should there be changes to your financial circumstances. However, changing to this method should only ever be carried out with guidance from an accounting firm specializing in your specific industry.
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