How to build a 13-week cash-flow forecast for a medical practice

A practice can report a profit and still face a difficult payroll week. A weekly cash forecast makes the timing of receipts and payments visible before the pressure arrives.

Start with cash you can actually use

Begin with a reconciled opening cash balance for the forecasted accounts. Identify restricted amounts, outstanding payments and other constraints separately. The opening number should not simply be the largest balance visible in online banking.

Build thirteen weekly columns, then roll the forecast forward as each week finishes. Thirteen weeks is a useful planning window, not a requirement or a guarantee. The best horizon is one that helps the practice see upcoming commitments and take practical action.

Forecast receipts by expected collection date

Use the timing of cash receipts rather than treating booked charges as immediate cash. Consider recent collection patterns, known payer delays and the status of unusual receivables. Separate expected operating receipts from financing proceeds or owner contributions.

A forecast should show uncertainty rather than hide it. If a large receipt is not dependable, identify that assumption and test what happens if it arrives later. Avoid counting both a receivable collection and the same amount again within a general collections estimate.

Place payments in the week they are expected

Payroll timing is an obvious starting point, but it is not the only commitment. Include rent, supplier payments, debt service, taxes, insurance and approved equipment spending as applicable. Show planned owner distributions separately so leadership can distinguish them from operating costs.

Use known due dates and payment schedules where available. Annual expenses divided by twelve may be useful for a budget, but that average does not show the week when a large payment leaves the bank.

Illustrative four-week excerpt — amounts in $000

Original teaching example only, not client data, a forecast or a recommended reserve. Ending cash = opening cash + receipts − payments. The next week begins with the prior week’s ending balance. A full worksheet continues through week 13.

Look at the lowest week, not just the final total

In the illustration, cash ends week four at $50,000, but reaches $35,000 in week three. Whether that is adequate depends on the practice’s commitments and circumstances. The model’s purpose is to expose that timing question, not to prescribe a universal cash threshold.

Discuss which commitments are fixed, which are discretionary and which decisions need to occur before the low point. A forecast that identifies a concern early gives leadership more time to evaluate options than a retrospective explanation of a missed expectation.

Build a downside case around a specific assumption

Choose a risk that is relevant to the practice: slower receipts, a delayed provider start, unexpected staffing costs or earlier equipment payments. Change that assumption while leaving unrelated inputs stable. This makes the effect understandable.

Keep the base case and downside case distinct. Do not insert financing that has not been approved as though it is certain. Where an assumption depends on a third party, record the dependency and update it when better information becomes available.

Update the forecast against actual results

At the end of each week, replace the elapsed forecast with actual receipts and payments. Explain significant differences and add a new week at the end. Repeated receipt shortfalls deserve a different response from a one-time timing shift.

Use the forecast alongside financial statements and revenue reconciliation. It is a planning tool, not a replacement for either. If opening balances and obligations are unreliable, improving that foundation is the first step.