National Maternal and Child Oral Health Resource Center | Georgetown University
Unit 3: Finances
Unit 5. Finances

Section 2. Clinic Finances

Managing Clinic Finances

Assistance with Financial Management

During the startup phase of a new safety net dental clinic, there will be a need to obtain the services of a person who can prepare and analyze pro formas and other required financial statements to establish the viability of the clinic. This person must also be available to assist clinic administrators and board members with interpretation and analysis of the data. If the new clinic is being added to an existing, established health center or other public health organization, there may be a chief financial officer or other financial analyst who can assist in this effort. If the clinic is a stand-alone or the entire health center is a new startup with no internal financial structure yet in place, then a certified public accountant (CPA) or another accountant may be employed to assist in creating the necessary financial statements and conducting analyses.

Developing a Budget

Budgets are prospective planning tools for both the short term and the long term. They are usually developed on an annual basis for a specified 12-month time period. They can be developed based on a calendar year or some other 12-month time frame. To maximize the usefulness of a budget, monitoring systems should be in place to assess the need for adjustment should things not go according to plan. Clinics should have separate operating budgets and capital budgets.

An organization's budget is a written plan to work toward its financial goals. Public programs (such as local health departments) and private nonprofit agencies may differ in how they structure their budgets.

  • Operating budget: Estimates all the expenses (see previous section) involved in achieving goals for the specified 12-month period. Budgets should reflect the most accurate picture of what is projected to occur in the specified time period. The revenue from the various sources should be estimated for the 12-month time period as well (see previous section). The previous year's statement of activities (Revenue and Expense Statement) (see next page) is a good starting point that can be used to project expenses and revenue by adjusting for inflation and changes in programming or funding. Forward-thinking planners may want to develop a multi-year budget for longer-term assessment of financial sustainability. Planning for the long term is important because major changes in revenue and expenses may occur beyond the current year, such as the expiration of a major grant, the need to re-negotiate a lease, program expansion requiring increases in personnel expenses, or the need to replace major equipment in subsequent years.
  • Capital budget: Plans for the purchase of major capital assets such as equipment or buildings.
  • Cash flow forecast: Projection of revenue and expenses are part of the budgeting process so that one can anticipate funding shortages. This projection should be performed for a few months at a time and updated on a regular basis.

Resources