Top tips to improve your cash flow

Keeping on top of cash flow is more important than ever, read our top tips for improving cash flow within your practice.

Cash flow management in its simplest terms is tracking the money coming in and monitoring it against the practice outgoings. GP practices are more fortunate than most businesses as there is a regular flow of income from NHS, however there are still ways to enhance your cash flow:

Be strict about invoicing and collecting fees for private reports – raise your invoices (and even collect the cash) for documents such as legal letters etc as quickly as you can once the reports are complete, or even before reports are handed over.
Collect the cash – it sounds simple but can be more difficult than anticipated. For any non-NHS income make sure you have built a strong relationship with the key people in the finance team, hopefully resulting in income being paid quickly and on time.
Understand your cash flows – seasonality can cause large fluctuations in cash flow within a practice, especially if the practice pays the tax liabilities for the partners in January and July. It is important to look at how the cash flows are impacted throughout the year and spread out some of the outgoings where you can by opting for regular monthly or quarterly payments.
Obtain estimates for large outgoings – don’t be caught out by unexpected superannuation or tax payments. These can and should be estimated in advance by your accountant, allowing you to plan for payment.
Manage your cash reserves – having a cash reserve gives you some comfort and peace of mind that you can access cash at short notice if an emergency occurred and helps to alleviate sleepless nights. The amount of reserve will depend on the size of practice, the level of outgoings, and attitude to risk. Your accountant can normally advise on a suitable level of reserve for your practice.
Claim for everything! – make sure you have taken full advantage of any monies available to you and your practice for which you are eligible. If you don’t ask, you won’t get!
Submit your claims early – try not to miss any deadlines which might delay payment for services – is this appropriate or is everything received automatically?
Reliable and up-to-date financials – no business can fully understand its position if it doesn’t have the information at hand to be able to make good quality decisions, particularly around cash flow. You can’t assess your status if you do not have a reliable and up to date position, so it is advisable to keep your practice records up to date, ideally using a cloud solution such as Xero which provides you with around the clock access. If you are simply too busy to keep the records up to date, consider outsourcing this part of your finance function. See previous insights on this here, or get in touch using the button below.