Cash flow forecasting is an important tool for a healthcare administrator to use in order to plan for new technologies that cause a financial strain on an organization in the short-term but perhaps a financial gain in the long-term. Abdullahi, Ibrahim, Ibrahim, & Ahmadu, (2017) discussed that cash flows are important for construction projects, and that if cash flow forecasting is not done properly, then the project will not be successful. This is especially true for big construction projects, when funding will need to occur over a longer period of time, and cash flow planning will need to look at trending for sustainability.

Another important function of cash flow forecasting will help the organization to look at the organization as a whole, as well as look at individual departments and services to assess for which ones are revenue streams and which ones are underperforming (Siganova, & Kozhushkina, 2014). This will help the organization to analyze the department further and assess for problems within. Beasley, (2012) noted that cash flow forecasting not only helps to assess underperforming departments and/or services, but can also help to identify which services may not provide ample reimbursement rates and perhaps outsourcing these may prove to be the better solution.

References:

Abdullahi, M., Ibrahim, Y. M., Ibrahim, A. D., & Ahmadu, H. A. (2017). Effects of organisational characteristics on contractors’ construction cash flow forecasting capabilities. Journal of Engineering, Project, and Production Management, 7(1), 33-44.

Beasley, D. (2012). End cash flow forecasting frustrations with a reimbursement reconciliation process. Clinical Leadership & Management Review, 26(1), 14-18.

Siganova, V. V., & Kozhushkina, I. V. (2014). The Impact of investment activity on the financial stability of the enterprise. European Journal of Economic Studies, 8(2), 93-98.

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