© MEDIQ Financial Services - a Corporate Authorised Representative of Synchron AFS Licence No. 243313 for Investment, SMSF and Risk Insurance advice.
March 3rd, 2015
Most medical practices in Australia operate as small businesses, and that means they are exposed to the same financial challenges as other small businesses through the country. As with any small business, getting the accountancy process right is essential for ensuring the business is able to run in a sustainable manner.
Accountancy can cause headaches for medical practices when those involved typically just want to get on with the job of looking after people’s health. With this in mind, here are some easy tips and tricks that can save your practice from the kind of headaches that can come at tax time with inefficient or poor bookkeeping.
Bank statements only go so far – they’ll show you where the money has come in and left the account, but keeping more detailed records than that will allow you to find information quickly when needed. Keep receipts in a dedicated folder, and if possible scan it into a digital file to later give to the practice’s accountant – the easier you make their job, the better the returns for your business.
It is important to take taxes out immediately at point of sale or when payroll is generated. While it might be tempting to defer this process at times, either to save time or to gain access to the additional money temporarily, the longer the time that passes between transaction and accounting the more likely it will be that an error is made. Paying taxes immediately will also save the practice from having a large lump tax sum bill at the end of the year, and prevent it from incurring penalties for delayed tax payments.
If your practice borrows any one idea from the way big business works, make it this one. Regular Profit & Loss Statements are an enormously effective way to check in on the overall financial health of the practice. In addition to validating your day-to-day records (and noting discrepancies that should be resolved), Profit & Loss Statements give you an overview of the flow of patients, an idea of where money could be invested into the business, and so on.
Medical practices often forget about these because they are less complex business models than corporations, but they are an essential part of any business.
Making money is important to a medical practice and, while this might sound obvious, keeping on top of invoices is something that many medical practices struggle with. First of all it’s important that you automate the process as much as possible, and having a system that will generate and immediately send out invoices can save the practice’s staff a lot of energy. Next, keeping a close eye on outstanding invoices is equally important in ensuring that work doesn’t go unpaid.
Many medical practices don’t have dedicated IT teams or resources, which means they’re often hesitant to make use of buzzword technologies such as “the Cloud”, but it’s something they should evaluate closely. The Cloud would allow the practice to keep its records in a centralised space that could be accessed from any computer anywhere in the world. This would make the work of the practice’s accountant much easier, as it would remove the need to move paper around, and it would give the accountant a single place to draw documents from.
Additionally, cloud-based solutions require no technical skills to set up. A practice would do well to conduct some research to find a secure service, and then start making use of it to store invoices, receipts, tax forms, and other important accounting documents.
In short, the easier you can make the job of your accountant, the greater the returns that you’re going to get from them. Keeping detailed, accurate records might be a time consuming task for an already time-strapped small business like a medical practice, but the alternative – having to scramble to pull documents together when they’re needed – is going to be even more time consuming in the future.