Cash Flow & Working Capital

“The practice looks profitable, but the bank account keeps getting tight.”

Profit and cash separate in predictable ways in a med spa: prepaid packages and memberships, inventory, settlement timing, and distributions taken from money that is already owed to patients.

Common root causes

Package, membership, and gift-card cash spent as if it were earned
Inventory absorbing cash ahead of demand
Distributions and capital purchases timed against peak months
Thin margins that leave no room for timing differences

Metrics that expose it

Deferred revenue coverage: Unredeemed package, membership, and gift-card liability ÷ Cash on hand
Inventory days on hand: Inventory at cost ÷ average daily cost of product consumed and sold
Net profit margin: Net income after all operating expenses, interest, and depreciation (before owner distributions) ÷ Total net revenue