Brushing up on your financial systems
All of my dental clients are keen to add value to their practice in one way or another. This is especially true in today’s economic climate where, although there is not necessarily a ‘recession’ in terms of patient numbers, there is an element of people delaying having major dental works carried out because of their own personal finances, and there is certainly a funding squeeze as banks tighten up their lending criteria.
Many practitioners are adding value to their practices by carrying out renovations to plant and equipment, improving the décor of their practice, increasing marketing and providing additional services above and beyond traditional dentistry. It is about spending now to accumulate later.
This provides a timely reminder that the Annual Investment Allowance for tax decreases from £ı00,000 to £25,000 from ı April 20ı2, so if you are planning renovations, time is starting to run out.
The vast majority of dentists, and indeed all my clients, are ambitious for themselves, their trainees, their patients and their practices. But how do you know how much of a financial return you are achieving on this investment?
It is important in any size and type of organisation to monitor performance and costs. Charities, small and medium sized enterprises, right up to major PLCs do this. While I am loathe to suggest a target-focused culture to dental practices where medical need is the primary driver, key performance indicators are crucial to ensure all is going to plan in your practice.
The installation of a computerised accounting package can assist with this. My firm, Martin Aitken & Co, is a member of the Sage Accountants Club, meaning we can provide accountancy software solutions to organisations of all sizes. The program is designed to be used by non-finance personnel, and can provide you with timely and regular financial information.
The installation of a software package such as Sage (others are available), will make it possible to quickly and simply pull off reports each month or quarter as suits. Figures will then be available to compare fee income, expenses and overheads to previous periods and ensure your practice is headed in the right direction and operating efficiently.
Good accountants will discuss such things with you at your accounting year-end, but imagine how much more useful these figures would be to you if you could take corrective action as and when issues are identified, rather than several months later down the line?
There are additional benefits too: if HMRC came knocking on your door for a spot check on your record keeping, are you satisfied you could provide them with all the answers within a reasonable time period? Or would you have to take time out to get your bank statements, invoices and NHS schedules together and spend your leisure time writing up spreadsheets and cashbooks?
We work closely with many of the banks and financiers operating within the healthcare sector, and where you require finance such as a loan or overdraft facility, it is helpful to be able to produce good quality management accounts each quarter or half year to furnish the bank with the required information they are increasingly asking for to satisfy themselves.
Many practice management software tools will let you track appointments, items of service provided and track these over time. Is your practice management software also capable of providing more detailed financial information on figures such as income breakdown and details of overheads?
Different sizes of practices will have different requirements, and to ensure clear, accurate and useful management information is available to you, your software package has to be set up properly from day one. If you think computerising your financial records could benefit you, save you time, give peace of mind and assist with adding further value to your practice, then get in touch with your accountant and see what they can recommend. We offer practical training services to get you up and running in no time so you can get back to focusing on what really matters – providing patients with high quality care and service.
About the author
Jayne Clifford is a partner at Martin Aitken & Co and has advised many dentist clients, including those both in the NHS and private sectors, for over twenty years. Jayne is contactable atand by telephone on 0141 272 0000. You can find out more about Martin Aitken & Co by looking at their website http://www.maco.co.uk
This is our understanding of the law at this point in time, and we would advise you to seek professional advice prior to taking any actions based on the above. This article is not intended as professional advice – it is for information purposes only.