FINANCE - CASH is KING

Effective Cash Management In today's Business Climate Cash and cash flow in any business determines the success or failure of the business.

The management of cash flow requires knowledge, discipline, experience and expert help.

Proper cash flow management can be used to maximize financial growth in the business and outside the business. Health professionals require knowledge and outside help to run their businesses as business challenges confront them daily.

Learning to use cash flow as a financial tool for your practice or business is absolutely essential. The methods used by successful practices and businesses who have control over their cash flow to help their business grow and flourish include the understanding of the following.

• What is “cash” and “cash flow”

• Your budget, forecasting and cash requirements

• Assessing your cash position

• Sources of cash –have your cash reserve from more than one source.

• How to increase cash flow with good credit and collection policies

• What to do with excess cash

• Where to go for help

More businesses fail for lack of cash and cash flow than for want of profit.
When planning the short- or long-term funding requirements of a business, it is more important to forecast the likely cash requirements than to project profitability.

While profit, the difference between sales and costs within a specified period, is a vital indicator of the performance of a business, the generation of a profit does not necessarily guarantee its development, or even the survival. Bear in mind that more businesses fail for lack of cash and cash flow than for want of profit.

Sales and costs and, therefore, profits do not necessarily coincide with their associated cash inflows and outflows. While a sale may have been secured and treatment delivered, the related payment may be deferred as a result of giving credit to the customer.

Dentists dealing with dental plans are in effect giving their patients credit. At the same time, payments must be made to suppliers, staff etc., cash must be invested in rebuilding depleted supplier, new equipment may have to be purchased.
The net result is that cash receipts often lag cash payments and, while profits may be reported, the business may experience a short-term cash shortfall. For this reason it is essential to forecast cash flows as well as projecting likely profits.
Cash planning entails forecasting and tabulating all significant cash inflows relating to sales, new loans, interest received etc. and then analyzing in detail the timing of expected payments relating to suppliers, wages, other expenses, capital expenditure, loan repayments, dividends, tax, interest payments etc.

The difference between the cash in- and out-flows within a given period indicates the net cash flow. When this net cash flow is added to or subtracted from opening balances, any likely short-term funding requirements can be ascertained.

Tess Lawson of The Bailey Capital Fund states, “dentists and health professional need to practice preventative money management somewhat like preventative dentistry.”

It is prudent to have your line of credit and your term and from separate institutions so that you are not at the mercy of one lender.

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Bailey Capital approves 90% of the lease and business financing requests that come into its offices.

The Bailey Capital Fund provides you the financing you need to do the business you want to stay competitive in today's market place.

Let  the Bailey Capital Fund help you out with your Small Business Financing Solutions, and get some extra Small Business ideas along the way!

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