Profit Without Cash Is Just a Number on Paper
A monthly system for tracking cash in and out, setting tax reserves, and spotting problems before they become a crisis.
A profitable month on paper doesn’t help if the cash isn’t actually there when rent is due. This is a monthly system, not a once-a-year review: track income, categorize expenses, set aside taxes, project the next 90–180 days, watch the numbers that actually predict trouble, and close the month in twenty minutes.
1 Track Monthly Income (Cash Basis)
2 Categorize Monthly Expenses
3 Calculate Profit & Set Aside Taxes
4 Project the Next 90–180 Days
5 Watch Practice Health Indicators
6 Close the Month in 20 Minutes
7 Common Mistakes to Avoid
This applies whether you’re a therapist, psychologist, licensed clinical social worker, professional counselor, or marriage and family therapist — solo practitioners and group practices alike.
Questions we get a lot
Profit is income minus expenses on paper. Cash flow is what’s actually sitting in your bank account, which can lag behind profit when insurance reimbursements are delayed or a large expense hits before the income that was supposed to cover it arrives. A practice can be profitable and still run short on cash in a given month.
25–30% of profit is a common starting point, moved into a separate account monthly. Increase to 30–35% if you’re in a high-tax state or your income has grown past what that range was originally set for.
Utilization is the percentage of scheduled sessions that actually happen, calculated as kept sessions divided by scheduled sessions. A low utilization rate means your schedule looks full but your income doesn’t match it, usually from cancellations or no-shows eating into billable time.
About 20 minutes if it’s a habit: reconcile accounts, update your tracker and tax reserve, and note one adjustment for next month. It takes far longer when it’s reconstructed all at once instead of kept current.
A cash flow system only works if you actually run it.
If twenty minutes a month feels like more than you have, we can help you build a system that fits.
Disclaimer: This checklist is for informational purposes only and does not constitute legal, tax, or financial advice. While we make every effort to keep the content accurate and up to date, federal and state laws and regulations can change without notice. Decisions based on this information should be made in consultation with a licensed CPA or attorney familiar with your specific situation. Leichter Accounting Services is not liable for any errors or omissions, or for any actions taken based on the contents of this checklist.