Identify all sources of cash. Once you have identified all cash sources including practice receivables, loans, and lines of credit, you can lay out a 24-month cash accumulation projection that estimates how much available cash the practice will have at the end of each month. Keep in mind that initially, the projection will be impossible to get right. The goal will be to modify the projection every month until it is correct. By month 6, the practice should be far more accurate in the projection.
Don't forget to keep three to four months of cash on hand. Practices that have at least three to four months of cash stored up will be protected if COVID-19 returns or any other negative event takes place.
Roger P. Levin, DDS, is the CEO of Levin Group, a leading dental management consulting firm, and one of the most sought-after speakers in dentistry. Dr. Levin has authored 65 books and more than 4,000 articles on dental practice management and marketing. You can sign up for the Levin Group Tip of the Day.
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