Nurse Managers need to understand working capital management methods for them to be able to strike a viable balance between the profitability, liquidity, and growth of a for-profit entity. Managers with the understanding of the capital management techniques can ensure that the business operates at a working capital ratio that ensures that there is enough cash flow for the business to cover her expenses as well as short term debts. A balance between current assets and liabilities can help health institutions to thrive well and efficiently accomplish their mandate.
Establishments should not hold a lot of cash to reduce the chances of hoarding cash which may result in the loss of the power to purchase commodities in the event that inflation hits the market. Too much cash in the inventory makes business entities lose the opportunity to earn interests. Having a dead stock in the form of cash within the business stagnates business growth. Additionally, there is likely to be the loss of the value of the currency when money is held by health institutions.
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Businesses hold cash for transactional, precautionary and speculative purposes. The ones that hold because of precautionary purposes do so as a safety margin for them to have a financial reserve to facilitate their smooth running. One other reason for holding cash is for the undertaking of normal transactions that sustain the normal business operations. Businesses also hold cash for speculative purposes in the sense that there will be in a position bargain for purchases and take advantage of arising opportunities such as a favorable exchange rate or interest rates.
Money can be invested in stocks and bonds and can be accessed at any time in the event of an emergency. Money can be invested in buying of stocks which can be sold at any given time when an emergency arises. Businesses may also invest in binds that may be sold at any given time or interest payments collected at the maturity period. Investing in bonds and stocks can help a business maintain liquidity while at the same time gaining some profits.
Revenues are the monies that businesses accrue after rendering their services of selling products. Revenues are recorded in income statements within a given time of operation of a business. In the event that a company makes some income, it is credited on the revenues accounts of the company. Receipts, on the other hand, refers to the cash that a company receives that are not in the form of revenue to the company. Examples of receipts for business are money borrowed from banks, receiving cash from debtors as well as cash received from the sale of the company’s shares.
In the setting of the healthcare providers, the flow of money in such entities give managers little control over the money. The flow of money in a hospital setting is such that patients pay their bills before being discharged or money flow from their health insurance service providers directly to the bank accounts belonging to the hospital. In such a structured manner of flow of receipts and revenue gives managers little control over how the finances flow.
There exist seven elements that are critical to accounts receivable management. Consistency in terms of service delivery, proper communication within the business and with the customers as well as enhanced customer service are some of the elements of accounts receivable management. Other elements include context, clarity, confidence, and collaboration.
In a business setting such as a healthcare service provision unit, costs associated with supplies include product costs, materials and supplies costs. These are the costs incurred in the purchase of medical equipment and drugs that are critical deliverables for the performance of the healthcare institutions.
