Is your medical practice cash flow coming up short? Interestingly, this can happen even if you’ve got more clients than ever before.
Nitschke Nancarrow’s Kym Nitschke explains five common cash flow killers that could be putting a drain on your business’s finances.
Take control of your medical practice cash flow once and for all by identifying and reversing these five cash flow killers.
1 – Bad Debt Management
Debt is the killjoy that hangs over your head like the overdue assignment you kept putting off when you were at Uni. You don’t like to think about it, but your situation will only get worse the longer you wait to deal with it.
Your medical practice’s debt can easily spiral out of control when interest, fees and other charges are added. Making the minimum monthly payment may not be enough, depending on the structure of your loan.
Some medical practice owners also make the mistake of taking on too much debt.
This approach to your loans can lead to growing monthly repayments that take a huge chunk out of that beautiful cash flow your business has been craving.
2 – Not Utilising Accounting and Practice Management Software
You don’t know what you don’t know.
Not using practice management and accounting software is probably holding your practice back from being as efficient as it could be. You might be missing subtle areas of your business that are draining money, or worse, alarming trends in your practice that have been building over months and years.
If you’re a doctor who has been running your own medical practice for years then you might be tempted to keep on doing things the way you’ve always done them. However, you could be missing important accounting and financial detail that is the key to your cashflow breakthrough. You will also be falling behind modern practices that have already integrated software for managing their practice and practice finances.
Paying to implement and integrate software into your practice does take a bit of time and money, which is why some doctors make the mistake of avoiding it.
3 – Tax Problems
A poor tax strategy could result in you paying out too much come tax time. That’s an obvious hindrance to your cash flow. But the reverse problem, not paying enough or not understanding your tax obligations could get you in trouble with the ATO and potentially face fines.
As a high-earning doctor and medical practice owner, keep in mind that the ATO will be expecting to see a high return from you. You need to plan ahead to make sure you make good on your obligations, but also optimise for savings where possible. This is where working with a medical accountant is crucial.
4 – Not Having a Risk Management Plan
Too many doctors just assume that they already know what kind of problems to expect and how to avoid them. Others simply feel that they’d be powerless should the worst happen, anyway, so they won’t bother worrying about it. As a result, these are the people who lose the most money when something bad happens.
It’s true that you can’t anticipate and avoid every single bad thing that could ever cripple your medical practice. But having a risk management plan will lower your chances of an event that hits your business so hard it never recovers.
Talk with a medical accountant to ensure that you have the right insurance coverage and savings structure to protect your business in the event of an economic downturn, legal issue or other unexpected problem.
5 – Not Getting Expert Accounting and Financial Advice
You may have been to medical school, but that’s not exactly the same thing as business school. Being a highly skilled doctor is great but it doesn’t guarantee that you can maintain a healthy cash flow in your medical practice.
Seek out professional advice to help you structure your clinic’s finances. You’ll be glad you did!
Get advice today
Great cash flow starts with great advice.
Contact Nitschke Nancarrow, experts in all aspects of medical accounting, financial planning and business. We operate in Adelaide, Sydney, Melbourne and throughout Australia. Managing partner Kym Nitschke is available for a free initial discussion about your situation. Call us on (08) 8379 9950 or send me an email.
– Kym Nitschke
The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
Taxation, legal and other matters referred to on this website are of a general nature only and are based on Nitschke Nancarrow’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
Nitschke Nancarrow specialises in accounting, tax and financial advice for superannuation. Contact us now for a no obligations discussion about your needs.Tags: cash flow, medical practice management