Finance and valuation
Cash flow
Cash flow is the movement of money into and out of a practice over time, showing whether cash received covers the bills coming due.
The SEC's building-block guide says a statement of cash flows reflects how cash moves in and out of an entity from cash inflows or receipts and cash outflows or payments. A practice can be profitable on paper and still run short of cash if patients and insurers pay slowly. That is why accounts receivable and days sales outstanding matter. The SBA also lists cash flow projections as part of a business plan. A forecast helps an owner see when payroll, loan payments and taxes will fall due. Owners often keep enough working capital to cover the gaps.