This worksheet from Ambermead Business Loans in Hot Springs, Arkansas works a medical or therapy practice's monthly cash flow by hand, with invented figures you replace with your own. It is arithmetic on your numbers, not an offer.
Medical Practice Cash Flow Analysis: Collections, Payroll and Rent Each Month
Cash flow analysis for a practice starts from what actually comes in, not what is billed. Collections are the payments received in the month from insurers and patients. Against them sit the month's cash costs: payroll and payroll taxes, rent, supplies, debt payments, software and billing services, and everything else that leaves the account.
- Write down collections for the month from your deposit records.
- List each cost category for the same month, from the bank statement and payroll reports.
- Subtract total costs from collections. A positive result is cash left over; a negative one is a shortfall.
- Repeat for each of the last twelve months to see the pattern.
Medical Practice Cash Flow Statement Lines the Calculator Mirrors
A full cash flow statement has three parts: operating activities, investing activities and financing activities. This worksheet mirrors the operating part, the cash from seeing patients and running the office, and adds debt payments from the financing part because they leave the account every month.
- Operating in: collections from insurers and patients.
- Operating out: payroll, rent, supplies, software and billing, utilities.
- Financing out: loan and lease payments.
- Left out on purpose: equipment purchases paid in cash and owner distributions, which you can add as their own lines.
An Invented Therapy Office Month, Worked Line by Line
Illustration only, invented figures. A two-therapist office in Hot Springs, AR records one month like this:
| Line | Amount |
|---|---|
| Insurance and patient collections | $68,000 |
| Payroll and payroll taxes | $41,500 |
| Rent | $6,200 |
| Medical supplies | $3,900 |
| Equipment loan and lease payments | $2,400 |
| Software, billing and other costs | $5,600 |
| Total costs (our sum) | $59,600 |
| Left after costs | $8,400 |
In this invented month the office keeps $8,400 after costs (our arithmetic). Now suppose the next month a payer slows down and collections fall to $49,000 while costs stay at $59,600. That month falls $10,600 short of covering its costs (our arithmetic), even though the claims are still owed and will be paid later.
Using the Result to Size a Practice Line of Credit
A shortfall that comes and goes, like the $10,600 gap in the invented example, is the pattern a business line of credit is built for. The practice draws in the short month and pays the line down when the delayed claims arrive.
- Work the worksheet for twelve months and note each month that falls short, and by how much.
- Take the largest shortfall and add a margin for a month worse than any you have seen.
- Check how many months in a row fell short; a line has to be paid down eventually, not carried at its limit.
- If shortfalls are in most months, the practice may need a change in costs or billing rather than more credit.
Bring the twelve-month sheet to the first call, or send the request form and have the sheet ready for the conversation.
Limits of a Cash Flow Estimate for a Clinic or Therapy Office
A worksheet built on past months shows what happened, not what will happen. It does not capture a large equipment purchase, a new provider's salary before they are credentialed, or a change in payer rules. It treats collections as they arrived, so a single large payment can make one month look stronger than the work behind it.
Use it to understand the pattern and to talk to a partner with real numbers. A partner will read your statements and reports directly and may calculate things differently. For accounting or tax questions, ask your accountant.
By Ambermead Business Loans · Updated