Direct answer
As of August 2026, a physician buyer should calculate working capital at closing from the first post-close cash-flow cycle. The calculation should include cash acquired, receivables retained or transferred, collection timing, payroll, deposits, taxes, debt service, transaction costs, planned changes, and a reserve for delays or surprises.
Define what transfers at closing
Confirm which cash, receivables, patient credits, accounts payable, payroll liabilities, deposits, prepaid items, inventory, and accrued expenses transfer to the buyer. The purchase agreement and closing statement should match the financial model.
Build a week-by-week closing forecast
Map expected collections and payments through the first payrolls and debt payments. Include credentialing or payer enrollment delays, billing-system transitions, vendor deposits, insurance, and any lag before normal collections resume.
| Closing liquidity item | What to confirm |
|---|---|
| Cash and receivables | Ownership, collectibility, cutoff, payer deposits, patient credits, and collection rights |
| Payroll and benefits | First pay dates, accrued obligations, bonuses, paid leave, retirement funding, and taxes |
| Operating commitments | Rent, vendors, insurance, technology, billing, supplies, and deposits |
| Transaction uses | Down payment, legal, accounting, valuation, lender fees, escrow, and closing adjustments |
| Transition spending | Staffing, systems, branding, credentialing, repairs, equipment, and patient communication |
| Reserve | Collection delays, denied claims, provider disruption, tax payments, and unexpected capital needs |
Keep operating cash separate from the purchase price
A transaction can be affordable on an earnings basis and still fail from insufficient opening liquidity. Show the down payment, transaction costs, working capital, and personal liquidity as separate uses of funds.
Set a post-close monitoring trigger
Review cash, collections, payroll, receivables, and upcoming commitments weekly until the practice reaches a stable close cycle. Use the cash-flow forecasting guide after the transition.
Primary sources
Frequently asked questions
Are accounts receivable always included in a medical-practice purchase?
No. The agreement should state which receivables, credits, refunds, and collection rights remain with the seller or transfer to the buyer.
Can the acquisition loan include working capital?
Some financing structures may include eligible working-capital uses, but the buyer must confirm lender rules, documentation, disbursement timing, and required equity.
When can the buyer begin taking distributions?
Only after the practice can meet payroll, taxes, debt, operating commitments, and reserve targets under the governing documents and lender terms.