Running Head: JOURNAL ASSIGNMENT
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4-1 Reflective Journal: Working Capital
HIM422
SNHU
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• There are various ways where financial calculations, financial statements, and
working capital are widely used in the organizational budget process. In general, the
budgeting process gives emphasis on planning for future profitability. This is because
earning a reasonable return on the resources is considered to be used as the objective of the
primary company (Osebo et al., 2019). Here, it is essential for the company to devise some
of the important methods to deal with the challenges, risks, and uncertainty of the future.
The financial statements can be used in the organizational budget process by the managers to
track the budget, performance, and other matrices for maintaining a big-picture mindset and
motivating the team. The working capital is extensively used to meet short-term obligations
and fund operations. The Financial calculation is used in the organization by identifying the
production for the month, expenses for the month, determining revenue, and others.
• In the organizational setting, managing the cash flow is essential to improve the
financial status of the organization. It is essential for the smooth functioning of the business
process. An organization must be very careful while managing the cash flow as any errors
can affect the whole financial system of the organization. The main objective of managing
cash flows is to measure the cash, maintain the cash level, schedule payments, make a cash
flow projection, generate an inflow of cash, and analyze clients. Thus, it is essential for a
manager to look after the cash flow system with the aim of fulfilling the main objectives.
• In the healthcare sector, the financial leaders usually show concern about having cash
on hand. However, having cash on hand is helpful to the leaders to reduce the financial
anxiety and stress, but it can also affect the organizational function. This is because the
business has the chance to lose an opportunity to create additional returns. Moreover, having
cash on hand lowers the return on the assets. Apart from these, having cash on hand can
cause major disadvantages related to the cost of capital increases (Reddy, 2020).
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• In the healthcare industry, it is essential to pay attention to accounts receivable
management because of the growing popularity of high deductible insurance plans. The
major factor that influences the account receivable is the insurance company’s denial of
claims. The research has identified that the healthcare industry has 4% of the benchmark
denial rate. Another important factor that can influence the account receivable is the risk of
a cash flow shortage. As it is tricky for the healthcare industry to manage the cash flow, the
accounts receivable process could be helpful to smoothen the fluctuation. Apart from these,
the hidden cost could be another factor that can influence the account receivable. This is
because it could be associated with the cost of interest and inflation (Reddy, 2020).
• There are various trends in the healthcare industry that has a continuous impact on
reimbursements for medical practice. The medical practices are striving to enhance the
healthcare industry’s revenue cycle processes because of the reducing physician
reimbursement, tightened claims data submission requirements, and rising healthcare abuse
and fraud (Crocker, 2006).
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References
Crocker, J. (2006). How to improve your revenue cycle processes in a clinic or physician
practice. How to Improve Your Revenue Cycle Processes in a Clinic or Physician
Practice/AHIMA, American Health Information Management Association.
Reddy, N. K. (2020, November 23). Advantages and disadvantages of excess of cash for an
organization. Small Business - Chron.com. Retrieved May 25, 2022, from
https://smallbusiness.chron.com/advantages-disadvantages-excess-cash-organization-
22792.html
