FORECASTED CASH FLOW

Forecasted Cash Flow

Forecasted Cash Flow

Forecasted Cash Budget

 

March

April

May

June

July

August

September

October

November

Cash on Hand

50,000

50,000

50,000

50,000

50,000

50,000

50,000

50,000

50,000

Forecasted Sales

250,000

275,000

320,000

450,000

575,000

700,000

825,000

350,000

285,000

Payment Collection (10%)

25000

27500

32000

45000

57500

70000

82500

35000

28500

Payment Collection (65%)

 

162500

178750

208000

292500

373750

455000

536250

227500

Payment Collection (25%)

 

 

62500

68750

80000

112500

143750

175000

206250

Direct Manufacturing Costs

187,500

206,250

240,000

337,500

431,250

525,000

618,750

262,500

 

Expenses

 

 

 

 

 

 

 

 

 

Administrative salaries

35,000

35,000

35,000

35,000

35,000

35,000

35,000

35,000

35,000

Lease payments

15,000

15,000

15,000

15,000

15,000

15,000

15,000

15,000

15,000

Depreciation charges

15,000

15,000

15,000

15,000

15,000

15,000

15,000

15,000

15,000

One-time Plant investment

 

 

 

95,000

 

 

 

 

 

Income Tax Payments

 

 

 

55,000

 

 

55,000

 

 

Miscellaneous Costs

10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

Forecasted Cash at end

-187,500

-41,250

8,250

-190,750

-26,250

6,250

-17,500

458,750

437,250

Forecasting your cash inflow (collections) determines your cash outflow (expenses) parameters. To forecast cash inflow, you need to determine what percent of your production is collected. (Collection percent = payments received less refunds divided by production) Begin by totaling your last 12 months of production (fees charged), total your collections (payments received), total refunds to patients and insurance companies. With this information calculate your collection percent by using the formula just given. As you look over the past 12 months be aware of trends. Is your production increasing or decreasing? Increases and decreases must be taken into account.

Forecast your next 12 months of cash inflow by multiplying anticipated production by the collection ratio, you calculated. Forecasted cash inflow = (production times expected increases or decreases in production) multiplied by collection percent! For example, if your production was $300,000, your collections less refunds is $285,000, then your collection ratio would be 95 percent. If you expect an increase of 10 percent in production, your anticipated production is $830,000. Multiplying $830,000 by 95 percent gives you a 12-month forecasted cash inflow of $813,500.

Set Production Goals

After establishing your anticipated production calculate your daily production goal. Decide on the number of days you plan to work in the next 12-month period. Subtract vacation weeks, meeting weeks, etc., from 52 weeks. Multiply the number of days you work per week by your answer. For example, if you work four days per week and will be out of the office for four weeks, you would be working 192 days per year (52 weeks - 4 weeks = 48 weeks; 44 weeks X 4 days per week = 192 days). To gross $330,000 working 192 days, your daily production goal would be $1,718.75. (Daily production goal = anticipated production divided by number of days you expect to work). Now, go one step further and determine specific daily production goals for hygienists, as well as your operatory time. Tracking Daily Production Goals, for a sample form for monitoring these goals.

Set your monthly production goal by multiplying the number of days you work each month by your daily production goal. Remember, the weeks you are out of the office are nonproductive; therefore, your monthly ...