Week 4 Flashcards
The Basics of Accounting:
Tracking Accounts Payable and Receivables
Monitoring Cash Flow
Developing a Budget
Managing Risk for Profitability
Tracking Accounts Payable and
Receivables
Accounts payable
-Bills, rent, payroll, credit card balances, loan obligations,
Accounts receivable
-Amounts your clients, insurance companies, federal or state funding programs OWE you
Cash Basis
accounting your
income when the
cash/payments are
received, (Cash,
Credit, checks, etc)
Accrual based
-The expenses have been incurred, but the payment is not
in hand!
-Usually used by large organization when they have to wait a long time for federal or state systems.
-The organizations can plan and budget, based on what is
coming in.
Monitoring Cash Flow:
-the movement of income and expenses in and out of
your program over the course of a period of time
-It is what you have readily available to pay rent, salaries, and monthly expenses.
- CASH coming in > cash going out = positive cash flow
-CASH coming in < cash going out = negative cash flow
Managing Cash Flow
The Manager Must Understand:
1) Capital Expenditures (Items you own or will own in time ie. office equipment)
2) Fixed Expenses (expenses that remain the same ie. rent)
3) Variable Expenses (phone bill, clinical supplies)
Developing a Budget
Budget = forecast of revenue and expenditures over 12 month period of time
Budget Equation:
Revenue – Total Costs = Profits
Budget should include:
1) Revenues needed for operations
2) Cash required for labor and supplies
3) Total start up costs
4) Day to day maintenance costs
5) Expected profit
FTE = Full Time Equivalent
amount of work 1 full-time employee is expected to
complete in an 8 hr day, 5 days/week for 52 weeks, over
2080 work hours per year
Employee benefits
20-40% of salaries are the cost of benefits
Workers comp
Health/dental insurance
long term disability
employee assistance
short term disability
accidental death insurance
Flex care spending accounts
Sole proprietorship
Owner is the business
Owner is fully liable for all risk
Partnership
Association among two or more people
-Limited Partnership – 2 levels of partners: general partners are
personally liable for the debt of business, limited partners have only
invested in the business and only risk capital they invested
Corporation
-Large business, separate entity that limits liability of shareholders
-Management, operational staff separate from owners
LLC limited liability company
Newer form of legal structure, allows owners the personal liability
protection of corporation
Passthrough taxation and operational flexibililty of a partnership
PLLC professional limited liability company
a business entity designed for licensed professions, such as lawyers, doctors, architects, engineers, accountants, and chiropractors
many businesses choose to form a limited liability company (“LLC”)
because of the tax, limited liability, and other benefits, states generally don’t allow LLCs for businesses where a license is required
Licensed professionals who want the benefits of an LLC must form a
PLLC instead
Veracity
-Accurate representation of credentials
-Objective, factual documentation of OT services
-Cosign- verifies cosigner has overseen treatment provided and provided appropriate supervision
