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Are you paying attention to the practice’s finances?

by in Accounting, Money, Pay

The practice’s finances can be seen as a chore that takes practice managers away from the more important tasks of running the surgery and making sure that there are enough GPs and nurses to see patients. Specialist medical accountant David Lockitt explains that when managed efficiently, finance work can be an invaluable tool in helping managers cope with the everyday stresses of running the practice.

Here are a few easy-to-implement pointers and thought processes that should help save time and produce more useful information with as little input from your team as possible.1

  1. Use software that is simple and intuitive, and that provides good reporting functions. Cloud based software now connects to the practice’s bank account and automatically downloads transactions daily. This can cut out an incredible amount of manual data entry time – not to mention getting rid of that tiresome end of month bank reconciliation problem that can cause a pile-up.
  2. Learn about the reports that your software can produce. If you want to ensure all of your claims and income are up to date, then a report that can show you income on a monthly basis will help identify gaps in money received so you can chase up unpaid claims without the need to keep complicated excel spreadsheets. You can also use reports to help monitor monthly staffing and locum costs to identify potential peaks and troughs in overtime and additional expenditure.
  3. Don’t put off doing your accounts until the end of the month or financial year. In a busy surgery it is not possible to lock yourself away for a day or two to get the month’s transactions up-to-date without being interrupted, and this can leave to mistakes and more time being needed by you or your accountant to correct any errors. Set aside 15 minutes first thing in the morning to process the previous days transactions. It gets the work done and you can get on with the rest of your day without worrying about the amount of work that is building up for you at the end of the month.
  4. Keep drawings simple. At our accountancy firm we see many ways of calculating a partner’s drawings each month, from take everything that is available to steady amounts each month with a lump sum every three or six months. Where a practice bases its drawings on what the bank level is each month, we find that there are significant fluctuations in how much can be drawn each month. This can cause both the practice manager and the partners undue stress and is also a disincentive for potential incoming partners, especially where they have a mortgage and other set outgoings each month. Look at setting drawings at the same amount each month with potential lump sums in January and July to help with tax payments
  5. Think about logging purchase invoices as they are received, instead of using a folder to hold them until they are paid. You can then produce reports of unpaid invoices each month when you do payment runs. This also means your system can identify potential cashflow problems for when purchase invoices become payable and allow the practice to budget and decide if there are obvious problems coming up. This also helps with making decisions on whether lump sum drawings can be distributed that month.
  6. Consider who is looking after the finances and whether they need help. Traditionally, keeping the practice’s records falls on the practice manager as an additional task, on top of looking after patients and staff. The practice manager may, however, not be suited to this role or due to the size of the practice may not have time so consider bringing in someone dedicated to the finance side of things. Alternatively speak to your accountant about the help they can offer with bureau services for payroll and bookkeeping.
  7. Do the partners know what is happening with the practice finances? Often, we see partners for year end meetings where the accounts that have been produced are a complete shock. Look at setting budgets at the beginning of the year and use these to assess actual results, before your accountant has looked at the year-end figures. Holding monthly or quarterly meetings where the finances can be discussed allows everyone to be involved. Consider allotting a finance partner to help with looking after the finances on a more regular basis so that there is someone there to offer support to the practice team.

Speaking to your specialist accountant before making changes will help to identify what needs to change and what can be changed. Remember they have probably been looking after your accounts for years and will know what the issues are and offer solutions that will help the practice move ahead on a sound financial footing.

David Lockitt is a member of the Association of Independent Specialist Medical Accountants.

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