How to Use a Cash Flow Statement in a Physio Clinic

Reckon published a guide on reading a cash flow statement and spotting cash flow issues early.

That is useful for physio clinic owners.

A profit report tells you if the clinic made money on paper. A cash flow statement helps show where the cash actually went.

You need both.

Profit is not the same as cash

Your clinic may show a profit and still feel tight.

That can happen when cash is tied up in:

• unpaid patient or third-party invoices
• equipment loans
• tax payments
• stock and clinical supplies
• fit-out costs
• owner drawings
• debt repayments

Profit does not always mean there is money ready for wages, rent, BAS, or super.

What a cash flow statement shows

A cash flow statement usually breaks cash into three areas.

1. Operating cash flow

This is money from normal clinic work.

It includes patient income, insurer payments, and regular clinic costs.

For most owners, this is the most important part.

If operating cash flow is weak, the clinic may be relying on loans, owner funds, or delayed bills.

2. Investing cash flow

This can include buying or selling equipment.

For a physio clinic, that may mean treatment beds, reformers, gym gear, shockwave machines, or fit-out costs.

Big equipment buys can reduce cash even when the clinic is doing well.

3. Financing cash flow

This includes loans, repayments, and money put in or taken out by owners.

It helps explain why the bank balance moved even if trading looked steady.

Use it before making big calls

Check your cash flow before you:

• hire another physio
• sign a bigger lease
• buy new equipment
• increase owner drawings
• start a large marketing campaign
• take on new debt

A clinic can afford something on paper but not in cash.

Keep the report simple

You do not need a complex finance pack.

Start with three questions each month:

1. Did normal clinic work create cash?
2. Where did the cash go?
3. What tight spots are coming in the next 13 weeks?

If you cannot answer these, ask your accountant to clean up the report.

The best use is action

A cash flow statement should not sit in a folder.

Use it to make choices.

Maybe you delay equipment. Maybe you change payment terms. Maybe you set aside GST weekly. Maybe you fix a billing delay.

The point is not to read more reports.

The point is to make better clinic decisions before cash gets tight.

Source: Reckon, “How to read a cash flow statement (and know what to do with it)”.