What Is Liquidity in a Dental Practice?
Liquidity is a financial measure of how easily your dental practice can meet its short-term obligations — such as payroll, rent, suppliers, loan payments, and tax — using available cash or near-cash assets.
In simple terms:
Liquidity = your ability to pay bills without panic.
High liquidity means you can handle unexpected costs, drops in revenue, or investment opportunities without external help.
Low liquidity = financial fragility.
Why Liquidity Matters for Dental Practice Owners
Most dental practices are profitable but illiquid — meaning they make good margins over the year, but still run out of cash at key points (e.g. tax deadlines, associate pay, quiet months).
Without liquidity, you face:
- Overdraft reliance
- Missed payroll
- Stress during NHS clawbacks or refund periods
- Poor decision-making driven by fear, not data
Example:
Your profit shows £10K/month.
But your cash balance is £4,000 — with £7,500 due next week.
→ You’re profitable, but not liquid.
Key Liquidity Metrics for Dentists
| Metric | What It Tells You |
| 12-Week Cash Buffer | Weeks you can survive without income |
| Current Ratio | Short-term assets vs. short-term liabilities |
| Operating Cash Flow | Real inflow from core business (not loans) |
| CFFP™ Projection | Matches expected inflows and outflows over 13 weeks |
| Liquidity Gap | Shows when cash will fall below safe thresholds |
DentPulse combines these into one smart scoring system: LIQUIDIQ™.
How DentPulse Measures and Improves Liquidity
| Feature | Function |
| LIQUIDIQ™ Engine | Scores your short-term liquidity on a red–amber–green scale |
| CFFP™ – Cash Flow Future Pairing | Projects whether future inflows match future commitments |
| Buffer Alerts | Flags when your cash reserve drops below 12 weeks |
| Timing Risk Detection | Spots month-end payment clashes before they hit |
| PPP™ Sync | Pauses or adjusts drawings if liquidity is at risk |
DentPulse turns cash stress into clarity — so you can run your practice with confidence, not guesswork.
DentPulse Tip™
Liquidity ≠ Profit.
You can run out of cash while making money.Track your liquidity weekly — and protect it like oxygen.
Related Glossary Terms
- 12-Week Cash Buffer – Your primary liquidity safety net
- CFFP™ – Cash Flow Future Pairing – Matches timing of inflows and outflows
- Operating Cash Flow – Core inflow from dental operations
- Liquidity Gap – When bills exceed projected cash
- PTP™ – Profit-to-Pocket™ – Blocks drawings when liquidity is low
Glossary Summary Table
| Term | Meaning |
| Liquidity | The ability to pay short-term obligations using cash or near-cash assets |
| Key Metric | 12-Week Buffer, CFFP™, Current Ratio |
| Risk | Running out of cash despite showing a profit |
| DentPulse Advantage | Real-time liquidity scoring, alerts, and drawing safeguards — all in one platform |
