Cash Flow and Forecasting
A profitable veterinary practice can still run out of cash. Stock is bought before it earns, insurers pay weeks after treatment, equipment takes a deposit up front, and corporation tax arrives in a single payment nine months after a year you have already spent.
Forecasting turns those timing differences into something you can see coming.
What We Build
- A rolling 13 week cash forecast
- For practices under pressure or going through a change, the weekly view is the one that prevents surprises. It is updated as actuals come in rather than rebuilt from scratch.
- An annual budget by month
- Seasonality matters. Vaccination cycles, holiday cover, insurance renewals and quiet trading months all move cash, and an even twelfth of the year is a poor assumption.
- Scenario models
- What a new vet costs before they generate income, what a second consulting room does to capacity, what a 4 per cent fee increase does if 2 per cent of clients leave.
- Lender and funder packs
- Projections presented in the format banks and asset finance providers expect, with the assumptions written down and defensible.
The Cash Traps Specific to Veterinary Practice
Direct insurance claims are the most common. A practice that moves from client-pays to direct claims improves client experience and pushes a large slice of income out by several weeks. That transition needs funding.
Pet health plans work the other way. Money comes in monthly ahead of the treatment it buys, which flatters cash while building a real commitment. A practice that spends plan cash as it arrives is borrowing from its own clients.
Equipment is the third. A digital imaging suite bought outright in a strong year can leave a practice short in a weaker one, when the same purchase on asset finance would have matched the cost to the income the kit generates.
Budgeting That Survives Contact With the Year
A budget built as an even twelfth of last year plus a percentage is worse than no budget, because it produces a variance every month that nobody can interpret. We build the annual budget month by month from how the practice actually trades, with vaccination cycles, holiday cover, insurance renewals and quieter trading periods put where they belong.
Tax payments go in as dated commitments rather than as a surprise. Corporation tax nine months and a day after the year end, VAT quarters, and for unincorporated practices the partners payments on account in January and July. A practice that has those in the forecast rarely has a January problem.
- Reforecast rather than rebuild
- Actuals replace forecast figures as the year runs, so the forecast stays current instead of becoming a document nobody opens after March.
- Track the assumptions, not just the numbers
- When the forecast is wrong, the useful question is which assumption was wrong. Recording them makes the next forecast better.
- Set a minimum cash position
- A floor below which the practice takes action, agreed in advance. Deciding what to do about a cash shortage is much easier before you are in one.
Frequently Asked Questions
We are profitable but always short of cash. Where does it go?
Do banks accept your projections?
How often does the forecast need updating?
Can you help us talk to the bank?
We are considering a large equipment purchase. Can you model it?
What if the forecast shows we run out of cash?
Find Out Where the Cash Is Going
A short forecasting exercise on your own figures usually finds the answer inside a fortnight. Tell us what the pattern looks like.