How to Read Your Practice's Financials (and What to Watch)

PhysioTax Updated October 2026 3 min read

You went to school to treat patients, not to read financial statements. But once you own a practice, a clear view of your numbers is what lets you plan, hire, and take time off with confidence. The good news is that you don't need to understand every line. You need to know which reports matter and which numbers to follow.

The three reports

• Profit and loss (P&L). Shows revenue and expenses over a period, and what's left. This is the report you'll look at most.
• Balance sheet. A snapshot of what the practice owns and owes on a given date, including cash, receivables, equipment, and loans.
• Cash flow. Shows where cash actually came from and went. A practice can be profitable on paper and still feel tight on cash, and this report explains why.

Why billed and collected aren't the same

PT practices wait on payers. You provide the care in one month, and the payment arrives weeks later. Your books may show revenue when it's billed, but your bank account only changes when it's collected. Looking at both explains most of the “why doesn't my bank balance match my profit?” questions.

Numbers worth watching each month

• Revenue and visit volume. Compare to the prior month and the same month last year. The trend matters more than any single month.
• Payroll as a share of revenue. Labor is usually the largest expense. Track the percentage as you add staff.
• Rent and occupancy costs. Another large fixed cost to keep an eye on.
• Net profit margin. What's left after all expenses, as a percentage of revenue.
• Accounts receivable aging. How much is owed to you, and how long it's been outstanding.
• Cash on hand. How many months of expenses your cash balance would cover.
• Owner pay and tax set-aside. Confirm you're paying yourself consistently and setting aside enough for estimated taxes.

Make the reports reliable

Reports are only as good as the books behind them. A few habits help: reconcile your bank and card accounts every month, use the same categories consistently, keep business and personal spending separate, and close the books within a couple of weeks of month-end so you're looking at current information.

Questions to ask each month

• Did revenue and visits move the way I expected?
• Is anything in expenses higher than usual, and do I know why?
• Are receivables getting older?
• Is there enough cash for the next two or three months, including taxes?

If any answer surprises you, that's the thing to talk through. Catching it in month three is far easier than discovering it at year-end.

Want this applied to your numbers?

We prepare your monthly reports and walk you through what they mean for your practice. Book a 30-minute call and we'll look at your situation together.

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