The Practice Owner's Monthly Cash Dashboard (5 Numbers to Track)

Disclaimer: The information on this website (including all examples, explanations, and content) is for general informational purposes only and should not be considered tax, legal, or financial advice. Always consult with a qualified professional about your specific situation.

You Do Not Need a Full Financial Report Every Month

Most practice owners get a monthly P&L and balance sheet from their bookkeeper and never really know what to do with them. The reports are technically correct, full of detail, and almost completely unhelpful for making decisions in the moment.

The practical alternative is a short monthly dashboard with five numbers. Not five categories. Five numbers. Each one tells you something specific about the practice's cash health, and each one has a clear action implication if it moves in the wrong direction.

This post walks through the five numbers I recommend every practice owner track monthly, what each one means, what good values look like, and what to do when one is wrong.

For the broader context on cash flow, our post on why your business shows profit but you're always short on cash covers the general dynamics. This post is the dashboard version.

Number 1: Cash on Hand

The number: how much actual cash is in the operating bank account at the end of the month.

Skip the line of credit. Skip the savings account that you would not touch. Skip pending deposits that have not cleared. Just the cash that is actually available to pay bills right now.

What Good Looks Like

For most professional practices, 30 to 60 days of operating expenses held in cash is healthy. Practices with seasonal revenue, large equipment debt, or significant deferred revenue obligations benefit from larger buffers (60 to 90 days).

The simple math: take your monthly operating expenses (everything you have to pay regardless of revenue, including payroll, rent, debt service, utilities) and multiply by 1 to 2. That is the target cash on hand range.

What to Do When This Number Is Wrong

If cash is below 30 days of operating expenses, the practice is operating without margin for error. Any disruption (slow month, unexpected expense, equipment failure) creates an immediate cash crunch.

The fix depends on why the cash is low. Pull out the A/R aging report and look at what is collectible. Look at owner draws and whether they have been outpacing sustainable distribution. Look at recent equipment purchases or debt service. Once you know which one is the leak, you can act on it.

Number 2: A/R Days

The number: how many days of billing are sitting in accounts receivable.

The calculation: total A/R divided by average daily billing (monthly billing divided by 30).

If you billed $300,000 last month, your average daily billing was $10,000. If your A/R balance is $200,000, your A/R days are 20. That means you are sitting on 20 days of unpaid bills.

What Good Looks Like

Cash pay practices: under 10 days (most of A/R should be very recent)
Insurance billed practices (dental, medical, vet, chiro): 30 to 45 days for well run billing operations, up to 60 days for typical
Hourly billing practices (law firms): 30 to 45 days
Pharmacy and insurance agencies: depends on payor mix and carrier remittance timing

What to Do When This Number Is Wrong

If A/R days is climbing month over month, the cash is going into receivables. Time to look at the A/R aging report, identify the largest aged balances, and either collect them or write them off.

A persistent climb usually points to a process issue. Front desk is not collecting at the time of service, statements are not going out timely, denied claims are not being worked, follow up calls are not being made. The fix is the process, not just the spreadsheet.

Number 3: Current Ratio

The number: current assets divided by current liabilities.

Current assets are things you can convert to cash within 12 months (cash, A/R, inventory). Current liabilities are things you owe within 12 months (A/P, current portion of debt, payroll due, taxes due).

What Good Looks Like

A current ratio of 1.5 to 2.0 is considered healthy for most small businesses. Below 1.0 means you owe more in the next 12 months than you have in current assets to pay it. That is a warning sign.

What to Do When This Number Is Wrong

If the current ratio is below 1.0, the practice may have trouble meeting near term obligations. The fix could be:

Collecting outstanding A/R
Reducing inventory levels
Refinancing short term debt into longer term debt
Increasing the cash buffer

A current ratio significantly above 2.0 can also indicate inefficiency (too much cash sitting idle, inventory levels too high). The goal is healthy, not maximum.

Number 4: Owner Draw vs Net Profit

The numbers: total owner draws (or distributions, for S corp owners) this month, and net profit this month from the P&L.

What Good Looks Like

For a sustainable practice, owner draws should generally stay below net profit on a rolling basis (over multiple months, not necessarily every single month).

Some months will have lumpy expenses or seasonal slow downs where draws temporarily exceed profit. That is fine as long as it averages out. Persistent draws above profit means the practice is being decapitalized to fund owner lifestyle.

What to Do When This Number Is Wrong

If draws have been consistently exceeding profit for several months in a row, the practice is being drained. The fix is either:

Reduce the draws (uncomfortable but necessary)
Grow the practice's net profit (slow)
Use one of the other dashboard numbers (cash, A/R) to figure out whether the profit number is real and just lagging behind expectations

This is the most uncomfortable dashboard number for most owners. It is also the most important one.

For more on the mechanics of draws vs salary and how they interact with cash flow, see our post on owner draws vs salary.

Number 5: Runway

The number: how many months the practice could continue paying its bills with current cash on hand if revenue stopped.

The calculation: cash on hand divided by monthly operating expenses (the fixed expenses you have to pay regardless of revenue, not including variable expenses like cost of goods that scale with revenue).

What Good Looks Like

1 to 2 months: tight; not enough margin for any disruption
2 to 3 months: typical for many practices; adequate but watch closely
3 to 6 months: comfortable; good buffer for typical disruptions
6+ months: very strong; possibly inefficient if cash is just sitting

What to Do When This Number Is Wrong

If runway is under 2 months, the practice is operating with no margin. Any slow month, equipment problem, or staffing disruption produces an immediate cash crisis.

The fix is usually a combination of building reserves (slow process) and reducing the practice's fixed cost base (which is often hard but worth examining).

If runway is over 12 months and the cash is just sitting in checking, consider whether some of it could be working in a higher yield account or in an investment that still allows reasonable liquidity. This is a planning conversation rather than a cash crisis conversation.

How to Build the Dashboard

The dashboard does not require fancy software. A simple monthly spreadsheet with the five numbers, the previous month, and a target for each one is enough.

The columns:

Number name
Current month value
Previous month value
Target value or healthy range
Action needed (yes/no with brief note)

The first time you build this, the numbers may surprise you. That is normal. The point of the dashboard is to see things clearly so you can act on them.

Where the Numbers Come From

Cash on hand: bank statement or operating account balance at month end
A/R days: A/R aging report total divided by recent monthly billing
Current ratio: balance sheet (current assets divided by current liabilities)
Owner draw vs profit: P&L for net profit; owner equity changes or distribution tracking for draws
Runway: cash on hand divided by monthly fixed operating expenses

If your bookkeeper is producing a clean balance sheet and P&L each month, the dashboard can be calculated in 10 minutes. If the books are messy and you have to chase the numbers, that is a sign the bookkeeping itself needs attention before the dashboard is reliable.

Frequently Asked Questions

My bookkeeper sends me a P&L every month. Why do I need this?

The P&L tells you what happened on paper. The dashboard tells you what is happening with cash. They are not the same. The five numbers above pull from the P&L and balance sheet but present them in a form that supports decision making.

Should I be the one tracking this or my bookkeeper?

Your bookkeeper produces the underlying numbers. You should be the one reading the dashboard. Practice owners who rely entirely on the bookkeeper to "tell them how the business is doing" tend to miss problems that the bookkeeper would not flag.

What is the right time of month to look at this?

End of month, after the books are reconciled. Usually 10 to 15 days into the following month for most small practices.

Should I look at trends or just current month?

Trends. A single month's data can be noisy (lumpy expenses, timing of large deposits). Three to six months of trend data tells you what is actually happening.

What if I do not have a balance sheet?

Then your bookkeeping is incomplete. Cash basis P&Ls without a balance sheet do not give you the information needed to track A/R days, current ratio, or true cash position. The fix is to get the books on a complete accrual basis (or at minimum a P&L plus balance sheet on cash basis).

Should I add other numbers to the dashboard?

Possibly. Some practices add specific KPIs (new patient count, production per provider, percentage of cash collected at time of service). The five numbers above are the universal ones. Industry specific KPIs are useful in addition.

Using the Dashboard

The dashboard is not magic. It is a discipline. Five numbers, looked at every month, acted on when they move in the wrong direction. The practices that consistently have cash on hand are not the most profitable ones. They are the ones whose owners actually look at the numbers and act on what they see.

If the bookkeeping itself is the bottleneck (the numbers are not reliable or do not arrive timely), the dashboard does not work. Reliable monthly bookkeeping is a prerequisite for everything else.

We work with practice owners across Quinlan, Hunt County, Rockwall, Kaufman, and the greater Dallas area on bookkeeping, cash flow reporting, and the broader tax planning that goes with running a practice. The owners who delegate this part of the business consistently know more about their numbers than the owners who try to handle it themselves on the side.

Want a monthly dashboard you can actually use? Contact us here to talk about getting your books and monthly reporting set up so the five numbers above arrive in your inbox each month without you having to chase them.