A behavioral health practice can be profitable on its income statement and unable to make payroll in the same month. Revenue is recognized when the session happens; cash arrives 20 to 90 days later depending on the payer, and payroll goes out every two weeks regardless. The instrument that closes that gap is a rolling 13-week cash forecast — a week-by-week view of cash in, cash out, and the ending balance, refreshed every week.
Why 13 weeks
One quarter is long enough to see a payroll crunch, a tax payment, or a lease renewal coming, and short enough that the numbers can be built from actual claims and actual commitments rather than guesses. Beyond 13 weeks the forecast becomes a budget; inside it, it is an operating tool.
Cash in: build it from the receivables, by payer
The largest and most variable line. Start from the open receivables aging by payer and apply each payer's historical collection timing — the share of a week's claims that typically pays in week two, week four, week six, and so on — to project when the money lands. Add expected collections on sessions not yet billed (this week's and next week's scheduled sessions, less the no-show rate, at net revenue per session by payer, lagged by each payer's timing). Self-pay is collected at the time of service and needs no lag. The result reflects the practice's actual payer mix and payer behavior, not a smooth average.
Cash out: dates matter more than amounts
Payroll on its exact dates, including the quarterly spikes when employer taxes or bonuses fall. Rent on the first. Malpractice and other insurance premiums on their actual due dates. Software and licensing renewals. Estimated tax payments. Loan payments and any line-of-credit interest. Contractor payments on the cycle they are actually paid. The forecast fails when someone smooths these into monthly averages — the crunch lives in the specific week when payroll, rent, and a premium coincide.
Worked example
An outpatient therapy group with 14 clinicians across two locations, roughly $3.1 million in annual net revenue, payroll every other Friday, and a $180,000 cash balance at the start of the quarter. Its collection timing, from its own remittance history:
| Payer group | Share of sessions | Net per session | Typical days to cash |
|---|---|---|---|
| Commercial A | 34% | $118 | 24 |
| Commercial B | 22% | $104 | 41 |
| Medicaid managed care | 19% | $86 | 55 |
| Self-pay / out-of-network | 25% | $165 | 0 |
The group completes about 520 sessions a week. Projected weekly collections run $54,000 to $63,000 depending on how many Medicaid-heavy weeks are landing. Weekly outflows average $49,000, but payroll weeks are $78,000 and non-payroll weeks are $20,000. Week 6 carries payroll, rent, the semi-annual malpractice premium ($14,500), and a quarterly estimated tax payment ($22,000). The forecast shows the ending balance dropping to $61,000 in week 6 — below the group's $95,000 floor (one payroll cycle plus rent) — then recovering by week 9.
Illustrative figures for a hypothetical practice; not a client's data.
Seen five weeks ahead, the dip is a choice: draw $40,000 on the line for three weeks, move a discretionary software purchase to week 10, and push patient-balance collection on the $31,000 of self-pay receivables over 30 days. Seen the week of, the same dip is a missed vendor payment and a stressful call to the bank.
The ending balance line is the point
Set a minimum cash floor — typically one full payroll cycle plus rent — and flag every week that dips below it. That flag, seen eight weeks out, is a decision with options. Seen the week of, it is a crisis.
Refresh weekly, and reconcile
Every Monday: replace last week's forecast with actuals, note the variance, and roll the horizon forward one week. A persistent collections shortfall from one payer means slower payment or rising denials; a shortfall against scheduled sessions means the no-show assumption is wrong. Reconciling makes the forecast better each week and sharpens the practice's understanding of its own revenue cycle.
What we would do in the first 30 days
- Pull twelve months of remittance data and compute days-to-cash and net revenue per session by payer group.
- Build the collections engine from the current receivables aging plus scheduled sessions, lagged by payer.
- Load every dated outflow for the next 13 weeks from the payroll calendar, lease, insurance schedule, tax calendar, and vendor terms.
- Set the cash floor with the owners and mark every week that breaches it.
- Run the first Monday refresh with the office manager and billing lead, assign ownership, and add the ending-balance chart to the monthly management report.