What is cash position?
The amount of cash on hand at a given moment across all accounts. A dental practice adds checking, a savings sweep, and petty cash to read it.
Definition
Cash position is the spendable money on hand at one moment, added up across every account that can pay a bill. On the books, this is a snapshot of cash and cash equivalents, not a period total and not a profit line.
A dental practice reads it by adding checking, a savings sweep, and the till. The question is how much can be spent today, not how the month's leftover looks.
It is an asset total at a date. It is not a ledger account of its own, and it is not the movement shown on the Statement of Cash Flows.
Stay with the snapshot when you read it. A forecast of next week's deposits is a different page.
Where it shows up
Balance Sheet: Located in cash and cash equivalents.
Cash flow: Related to the ending cash the three sections add up to.
P&L: Related to profit, which can sit in receivables instead of this number.
See also: Cash And Cash Equivalents · Cash Flow Forecast · Liquidity
When you look at your Balance Sheet, this snapshot usually starts at the cash and cash equivalents line. Checking, savings, and true near-cash are often already added there.
When the total is high, payroll and vendors can be covered without borrowing. When it is low, Friday's bills may be tight even if the practice is busy.
The Income Statement does not list this snapshot. Net income can look healthy while the extra leftover sits in unpaid invoices.
On the Statement of Cash Flows, the three sections explain how cash moved from the opening snapshot to the closing one. This page stays on the amount sitting there at a moment, not on that walk.
How it works
Add every account you can spend from without a penalty or a lender's permission. The operating bank account is usually the largest piece.
A savings sweep that can move back to checking the same day belongs in the total. Petty cash in the till belongs too, even when the amount is small.
Leave out unpaid invoices, inventory of supplies, and money a lender can stop you from using. Those may be current assets, but they are not this snapshot.
The total goes up when patients pay, owners put money in, or the practice borrows. It goes down when you run payroll, pay labs, buy a chair, or repay a draw.
Stay with one moment when you read it. Monday morning and Friday afternoon can be different totals after payroll hits.
Do not treat the main checking login as the whole picture. A sweep and a second account can hold a large share of what you can actually spend.
A bank feed and a reconciliation keep the snapshot honest. Outstanding checks and deposits in transit have to be explained so the book total matches what you can spend.
How readily those dollars cover near-term bills is a different reading. This page stays on the amount on hand, not on that coverage test.
Example
North Shore Dental keeps $42,000 in checking, $18,000 in a savings sweep, and $400 in petty cash. Add those three and the snapshot is $60,400.
That $60,400 is what the practice can spend this morning. It is not the month's leftover, and it is not a forecast of next week's collections.
If a $12,000 crown case is still unpaid, accounts receivable is higher and this snapshot is unchanged. The invoice is not cash until it clears.
If payroll of $18,000 hits Friday, the snapshot falls by that amount the same day. The Income Statement may have accrued those wages earlier; the snapshot moves when the cash leaves.
The practice does not post a separate line that says this snapshot. The books already hold the accounts; you add them.
A second location's checking account belongs in the same total if the practice can spend it. Leaving it out makes the morning read too low.
Common mix-ups
This snapshot is not the same as profit. A busy month can still leave a thin total if patients have not paid.
This snapshot is not the same as cash and cash equivalents as a policy category. That grouping is the usual Balance Sheet home; this reading is the amount at a moment, including every spendable account you choose to add.
This snapshot is not a forecast. Next week's deposits and the next quarter's week-by-week walk are later questions.
Related terms
- Cash And Cash Equivalents: Bank balances and near-cash holdings that can be spent immediately.
- Operating Bank Account: The main checking account through which day-to-day receipts and payments flow.
- Cash Flow Forecast: A forward projection of cash receipts and payments.
- Liquidity: How readily the business can cover near-term obligations with available cash.
- Cash Runway: How many months current cash will last at the present burn rate.
- Bank Reconciliation: Matching the book cash balance to the bank statement and explaining every difference.
- Net Change In Cash: The total increase or decrease in cash across all three cash-flow sections.
- Thirteen-Week Cash Flow Forecast: A rolling week-by-week cash projection covering the next quarter.