Financial Growth In Allied Health Organizations

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Posted on 18th November 2011 by admin in Uncategorized

Growth in allied health organizations is often accompanied by an expansion of technology, plant and equipment well in advance of the ultimate receipt of cash from customers.  Growing organizations can avoid bankruptcy with careful financial planning concerning their liquidity and solvency in relation to growth.  The key is to focus on the long-term plans for cash.  It is often said that banks prefer to lend to those who don’t need the money.  Certainly banks do not like to lend to organizations who are desperate for money.  When studying how to become an accountant they teach the key to focus on long-term plans for cash.  A more sensible approach for expanding an allied health organization then going to the bank in March, would be to lay out a long-term debt plan for how much it expects to grow and what the cash needs are for that amount of growth.  The money can then be obtained from the issuing of bonds and additional shares of stock….or orderly bank financing can be anticipated and approved well in advance.

Apparently, even in a profitable environment cash flow projections are a real concern.  Liquidity and solvency are crucial to an organization’s viability.  In accounting of allied health organizations we return to the issues of liquidity, solvency, profitability, and expansion.  A substantial amount of emphasis in financial accounting is placed on providing the user of financial information with indications of any organizations liquidity and solvency.

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